India joins elite club to enable free 24x7 NEFT funds transfer facility

India moved to round-the-clock payment transfer system effective Monday, joining only a handful of countries globally to do so. On top of it, the Reserve Bank of India (RBI) said effective January 1, banks should not charge anything to their savings account holders for availing such a facility through online or mobile modes.

 

From Monday, the facility got activated, and banks have started offering their customers round-the-clock NEFT services, except for a half an hour break after midnight in some cases.

 

Earlier, effective July 1, the RBI had waived processing charges it for transactions processed in NEFT. Last week, the RBI had opened a special window for settlement of the NEFT transactions. On Monday, between 12 am to 8 am, over 1.14 million transactions were settled, according to the central bank. This, according to RBI Governor Shaktikanta Das, is RBI’s effort to offer Indian customers a bouquet of e-payment options. Freeing up such transactions was to give further impetus for such digital retail payments.

 

“The RBI  joins an elite club of countries having payment systems which enable round the clock funds transfer and settlement of any value,” RBI tweeted.

 

So far, Australia, Hong Kong, Mexico, Sweden, Turkey, the UK, South Korea, Singapore, South Africa, and China have such payment system.

 

NEFT began operations on November 21, 2005 with one settlement a day, in which only eight banks had participated. Subsequently, 216 banks participated with settlements progressing to half-hour batches from 8 am to 7 pm. NEFT handles on an average 10.5 million transactions daily with an average value of around Rs 80,000 crore.

 

About 57 per cent of the retail payment systems in terms of value, as of October 2019, went through the NEFT system, according to the RBI data. The average ticket size for NEFT in October was over Rs 76,500 as compared to Rs 8,900 and Rs 1,660 in IMPS and UPI, respectively.

 

The first batch of NEFT, which used to start at 8 am, on an average, used to process around 1 million transactions. This number used to increase after holidays indicating the demand for extended hours. Thus, operating NEFT 24x7 would ensure faster availability of funds for merchants



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