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Electronic fund transfers set to become free

New Delhi: In a move that would bring relief to bank customers, the government has asked the Reserve Bank to work out a framework under which funds could be transferred electronically free of charge from one account to the other. These suggestions were made by Finance Minister Pranab Mukherjee in his address at a meeting with chief executives of the public sector banks, which among others, was also attended by RBI Deputy Governor K C Chakrabarty.

At present, banks charge between Rs 5 to Rs 55 for electronic transfer of funds from account of one bank to another through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS). "I would also urge upon Reserve Bank of India (RBI) to proactively work on this front and to see that all electronic banking transactions should be possible without any charges being levied," Mukherjee had said on Tuesday.

Cost free electronic transaction would encourage customers to use this medium for inter-bank as well as intra-bank fund transfer across the country. The move would also help reduce cash movement and cash transaction, a senior official of a public sector bank said. For outward transactions under RTGS mechanism, banks charge Rs 30 for electronic transfer of Rs 2 lakh to Rs 5 lakh and Rs 55 for amounts above Rs 5 lakh.

On the other hand, under NEFT the charges range between Rs 5 and Rs 25. Citing example of Oriental Bank of Commerce, which has waived all charges for electronic transactions up to Rs 1 lakh, Mukherjee had said, "I am confident that all the public sector banks would follow this excellent initiative." The Department of Financial Services is working on the implementation of an action plan to bring the country`s banking payment structure at par with global standards.

"Public sector banks must promote electronic mode of transactions over other modes. They should examine the possibility of making NEFT transactions upto Rs 1 lakh free of charges, as has been done by Oriental Bank of Commerce," Mukherjee had said. He also told the bank chiefs to that the use of debit cards to the point of sale without any transaction charges at least for micro and small transactions should be their next objective.

Farmers should be able to buy their agricultural inputs by using their KCC-cum-debit cards at point of sale machines, without the use of cash, he said. Also, all fair price shops should be similarly covered. "I would request all stakeholders to work in this direction so that use of cash could become less important," he added.

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