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Charge for online funds transfer (NEFT) under Rs.1 lakh to be free

In what can be seen as an effort to encourage people to go for electronic fund transfers, the Government has asked Public Sector Banks to charge NO fees for online transfers up to Rs.1 lakh. Of course, it hasn’t issued any deadline to implement the advice but it is widely anticipated that PSU Banks will follow the recommendation very soon. Current NEFT charges in SBI

As shown in the picture, most banks charge up to Rs.5 (private banks such as ICICI also levies a service tax over this Rs.5) for online transfers up to Rs. 1 lakh to other banks (transfers with in the bank always remain free). While this may not be a big amount, it surely doesn’t hurt users if even this little charge is removed entirely. Surprisingly, no changes have been recommended for transfers over Rs.1 lakh.

While most public sector banks are thinking about implementing this advice, some banks’, such has SBH (an associate of SBI), has already zeroed the fee. Now, only if the parent bank follows the footprints of its child; it would be a worthy change. And if all PSU’s implement the change, it may not be that long for the privates’ to follow the new norm (SBI still collects Rs.5 and private banks, such as Axis bank charges Rs.2.50 for NEFT under Rs.1 lakh).

The Government has also asked the banks’ to identify the top 20% of the high turnover branches (of respective banks) and try to reduce the cheque usage by at least 5% by the end of current financial year.

PS. If any one of you get doubt whether this change is concerned with NEFT or RTGS; let me clear it by clarifying that this is concerned with NEFT, obviously, since the RTGS can only be used to transfers funds over Rs.2 lakhs.

Tip: In case you need to transfer an amount more than Rs.1 lakh (say 1.5 lakhs) and your bank offers free NEFT below Rs.1 lakh, you can obviously split up the amount and send it in two parts, say Rs.90000 one time and remaining Rs.60000 the next time.

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