Oriental Bank scraps service charges on NEFT payments up to Rs 1 lakh

Taking the lead, Oriental Bank of Commerce (OBC) has done away with service charges on all NEFT payments up to Rs 1 lakh originating through its branches.

This move will encourage retail customers to adopt electronic mode in a big way for their payments, Mr S.L. Bansal, Chairman & Managing Director, said here.

Currently, under NEFT scheme, banks are allowed to charge from the remitter up to Rs 5 (plus service tax) for outward remittances up to Rs 1 lakh.

National Electronics Fund Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer.

Under this scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the scheme.

Lower service charge

OBC has also settled for a lower service charge on NEFT outward payments beyond Rs 1 lakh and up to Rs 2 lakh. The remitter will now be charged Rs 10 (plus service tax) against the earlier charge of Rs 15 (plus service tax), Mr Bansal said.

However, there is no change to the service charge on outward remittances beyond Rs 2 lakh, he said, adding that they remain at Rs 25 (plus service tax).

Benefits of NEFT

There are several benefits that NEFT offers over the other modes of funds transfer. The remitter need not send the physical cheque or demand draft to the beneficiary.

The beneficiary need not visit his/her bank for depositing the paper instruments. NEFT is cost-effective and there is near real time transfer of the funds to the beneficiary account in a secure manner.

krsrivats@thehindu.co.in