Processing fee for electronic funds transfer waived

In an effort to give a fillip to electronic mode of payment, the Reserve Bank of India (RBI) has waived processing charges for all transactions through the electronic funds transfer (EFT) scheme, special electronic funds transfer (SEFT) scheme and electronic clearing service (ECS). The waiver of charges will be in effect from June 14, 2005 upto March 31, 2006.

In October 19, 2004 RBI waived all processing charges for ECS and EFT modes of funds transfer for individual transaction below Rs 2 crore and a flat processing fee of Rs 50 was charged for transaction involving Rs 2 crore and above.

"In order to give further fillip and to encourage electronic mode of payment which is fast and efficient, it has been decided to completely waive the processing charges for all electronic products for transactions involving Rs 2 crore and above with effect from June 14, 2005," said a release from RBI.

Both ECS, used mostly for bulk payments such as companies/institutions paying interest, pension, salary, dividend etc and EFT, typically used for individual payments have grown considerably in the 1999-2004 period.

ECS volumes in 1999 were as little as Rs 67.4 crore which jumped to Rs 9,676 crore in 2004. During the same period EFT volumes grew from Rs 0.6 crore to Rs 15,711 crore according to the RBI annual report 2003-04.

Electronic payments amounts to low transaction costs, time saving, lesser handling of paper and reduced manual work.

Electronic payment systems for retail cover transactions through payment products (credit, debit, prepaid, smart cards and ATM cards), direct fund transfer through banks and transaction on the internet.

All these electronic fund transfer systems are settled on a deferred basis. RBI is planning to make settlment for EFT payments on a T+0 settlement cycle soon.