What changed
RBI observed that most agency banks were charging service fees for government remittances via electronic modes like ECS, EFT, NEFT, and RTGS. The circular reiterates that such transactions are part of agency services and must be free of cost, as RBI itself does not charge banks for these facilities.
What it means for you
Banks accredited as agency banks for government departments must absorb the cost of processing remittances through all electronic channels. This eliminates a potential revenue stream from government clients and reinforces the zero-charge principle for government transactions. Banks need to ensure their systems and branches comply to avoid regulatory action.
What you must do
- Review all current charges applied to government remittance transactions via ECS, EFT, NEFT, and RTGS and ensure they are removed immediately.
- Communicate this directive to all authorised branches handling government accounts to stop levying any fees.
- Update internal policies and system configurations to flag and prevent any future charges on government remittances.
- Train branch staff on the free-of-cost requirement for all modes of government remittances.
Who it affects
All agency banks accredited to Central and State Government departments, Authorised branches of agency banks handling government transactions
Does this circular apply to all types of government remittances?
Yes, it applies to all remittance transactions by accredited banks for Central and State Government departments, irrespective of the mode—whether ECS, EFT, NEFT, RTGS, or any other electronic method.
Why did RBI issue this reminder?
RBI found that most agency banks were charging service fees for electronic government remittances, contrary to existing instructions. This circular reiterates the free-of-cost requirement and clarifies that RBI itself does not charge banks for these services.
What should banks do if they have already charged fees for such transactions?
The circular does not address refunds; banks should immediately stop levying any charges and ensure compliance with the free-of-cost requirement.