What changed
Previously, transactions of Rs 2 crore and above attracted a flat processing fee of Rs 50 per transaction, while smaller amounts were already free. Now, even large-value electronic transfers are completely free of processing charges, with the waiver valid until March 31, 2006.
What it means for you
Banks can now offer cost-free electronic fund transfers for high-value transactions, encouraging corporate and institutional clients to shift from paper-based instruments. This reduces operational costs for banks in the long run but may temporarily lower fee income from large-value transfers. The move aligns with RBI's push for a faster, more efficient payment ecosystem.
What you must do
- Update your system to stop charging processing fees on EFT, SEFT, and ECS transactions of Rs 2 crore and above from June 14, 2005.
- Communicate the waiver to your corporate and high-value customers to promote electronic payment adoption.
- Monitor transaction volumes and costs to assess the impact on fee income and operational efficiency.
- Ensure compliance with the waiver period ending March 31, 2006, and prepare for any subsequent changes.
Who it affects
Scheduled commercial banks, Corporate and institutional customers making large-value electronic transfers
Does this waiver apply to all electronic fund transfer products?
Yes, the waiver covers EFT, SEFT, and ECS schemes for transactions of Rs 2 crore and above.
How long will the processing charge waiver be in effect?
The waiver is effective from June 14, 2005, and will remain in place until March 31, 2006.
What was the charge before this circular for large transactions?
Earlier, a flat processing fee of Rs 50 per transaction was charged for amounts of Rs 2 crore and above.