RBI pushes banks to cut electronic payment charges
No longer current — replaced by RBI/2025-2026/261
Source: Reserve Bank of India · RBI/2005-06/218 · issued 23 Nov 2005 · ~2 min read
Quick answerRBI urged scheduled commercial banks to review and reduce service charges on electronic payment products like RTGS, ECS, and EFT to promote digital transactions over paper-based systems, noting that RBI waived its own service charges on ECS and EFT transactions until March 31, 2006, and that RTGS had no service charge from commencement, also waived to same date.
What changed
RBI highlighted that high service charges were constraining growth of electronic payment systems. It waived its own service charges on ECS and EFT transactions up to March 31, 2006, and noted that RTGS transactions had no service charge from the start, with the waiver also valid until that date. Banks were explicitly asked to review their service charges on electronic payments to encourage adoption.
What it means for you
Banks need to reassess their fee structures for electronic payment products to make them more affordable for customers. Lowering charges can accelerate the shift from paper-based to electronic transactions, which in the long run reduces operational costs and improves efficiency for banks. This aligns with RBI's broader goal of building a robust digital payment ecosystem.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Review and reduce service charges on RTGS, ECS, and EFT transactions to promote electronic payments.
Develop and expand delivery channels for electronic payment services using RBI's payment systems without further delay.
Acknowledge receipt of this circular and report action taken to RBI.
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Why did RBI waive service charges on ECS and EFT?
RBI waived its own service charges on these transactions up to March 31, 2006, to remove cost barriers and encourage banks and customers to adopt electronic payment systems over paper-based ones.
Does this circular apply to all banks?
It applies to all scheduled commercial banks except Regional Rural Banks, as per the addressee list in the circular.
What is the deadline for banks to act on this?
The circular does not specify a strict deadline, but banks are urged to act without delay and to acknowledge receipt and advise RBI of action taken.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Superseded byRBI/2025-2026/261
📜 Read the original circular — full text as issued by RBI
RBI/2005-06/218
Ref. DPSS (CO) No.796/01.01.59/2005-2006
November 23, 2005
To Chairman / Chief Executive Officers of all the Scheduled Commercial Banks
(Other than Regional Rural Banks)
Electronic Payment Products - Service Charges
An extract of the Mid-term Review of Annual Policy for the year 2005-06 reads as under-
" Para 103: One of the constraints in the growth of electronic payment systems has been the high rate of service charges being levied by banks. In this context, the Reserve Bank waived service charges on banks for both electronic clearing service (ECS) and electronic fund transfer (EFT) transactions up to March 31, 2006 with a view to promoting EFT and encouraging ECS. Furthermore, no service charge is being levied for RTGS transactions since its commencement and this waiver is also valid up to March 31, 2006. As electronic payment systems facilitate straight-through processing and are cost-effective in the long run, banks are encouraged to review service charges being levied on such transactions."
It may kindly be appreciated that the purpose of making a mention of this in the Mid-term Review was to emphasise the need for banks to quickly move towards electronic payment systems from paper based payment systems and to bring greater efficiency in transaction processing. Banks are, therefore, requested to develop appropriate delivery channels of electronic payment services using the RBI developed payment systems like RTGS, ECS, EFT, NEFT etc., as payment system infrastructure with no further delay. In line with the spirit of above para, the service charges may also be reviewed keeping in mind the need for promotion of electronic payment culture, which in due course, may work out cost effective for the banks and provide several spin-off benefits.
Kindly acknowledge receipt and advise us of the action taken.
Yours faithfully
Sd/-
(A. P. Hota)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/218 · issued 23 Nov 2005. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2634&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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