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    RBI extends RTGS, NEFT money transfer facilities beyond banks

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    RBI extends RTGS, NEFT money transfer facilities beyond banks

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    Till now, only banks were allowed to use RTGS and NEFT payments facility.

    In a major boost to payments space, the Reserve Bank of India (RBI) on Wednesday extended Real-time gross settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities to digital payment intermediaries and other RBI regulated trade platforms.
    RBI said that it is proposing to enable non-bank payment systems like PPIs, card networks, wide-level ATM operators, among others to take direct membership in the central bank run RTGS and NEFT.
    Till now, only banks were allowed to use RTGS and NEFT payments facility.
    RTGS can be explained as a system where there is a continuous and real-time settlement of fund transfers, individually on a transaction by transaction basis (without netting). On the other hand, NEFT is a nationwide centralized payment system owned and operated by the central bank.
    According to Adhil Shetty, CEO, BankBazaar.com, this move by the RBI opens up a secure online payments system to a large number of regulated entities.
    "While these non-bank payment operators – which include PPIs, card issuers, etc., – will not be eligible for any liquidity facility from the RBI to facilitate settlement of their transactions via the CPSs, they will still be able to leverage the NEFT and RTGS infrastructure for fund transfer. This move can help them minimize settlement risk significantly and at the same time, give a big boost to online payments," he said.
    "This is a very positive development by RBI and will give a big impetus to online payments and the digitization of the Indian economy. 24 x 7 enabling of NEFT, RTGS, etc gives a big boost to commerce which will have a multiplier effect on our economic growth and GDP. Alongside, it also strengthens India's position globally as the flagbearer of the most advanced digital payments and fastest settlement cycles after UPI," added Abhishek Soni, CEO & Co-Founder of Upwards.
    Meanwhile, the central bank kept interest rates steady at record lows on Wednesday, as widely expected, sticking to its accommodative monetary policy amid concerns that rising COVID19 infections could derail the country's nascent economic recovery.
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