RBI has also decided to set up a committee to review the charges levied on the use to ATMs

Highlights RTGS is meant for large-value instantaneous fund transfers

NEFT system is used for fund transfers up to Rs. 2 lakh

RBI said it levies minimum charges on banks for RTGS, NEFT transactions

The Reserve Bank of India (RBI) has decided to do away with charges levied on Real-Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) payments. "Banks will be required, in turn, to pass these benefits to their customers. Instructions to banks in this regard will be issued within a week," the central bank said in a statement on Thursday. The Real Time Gross Settlement System (RTGS) is meant for large-value instantaneous fund transfers while the National Electronic Funds Transfer (NEFT) System is used for fund transfers up to Rs 2 lakh. (Also read: RBI Cuts Rate To Lowest In 9 Years To Boost Growth)

Here are 5 things to know about RBI's announcement:

1. In its statement on developmental and regulatory policies after the Monetary Policy Committee's meeting, RBI said it levies minimum charges on banks for transactions routed through RTGS and NEFT system for other fund transfers. Banks, in turn, levy charges on their customers.

2. It has been decided to do away with the charges levied for transactions processed in the RTGS and NEFT systems in order to provide an impetus to digital funds movement, the central bank said.

3. RBI has also decided to set up a committee to review the charges levied on the use to ATMs as the usage by the public has been growing significantly.

4. "There have, however, been persistent demands to change the ATM charges and fees," the RBI noted. In order to address these, it has been decided to set up a committee involving all stakeholders, under the chairmanship of the chief executive officer, Indian Banks' Association (IBA), to examine the entire gamut of ATM charges and fees.

5. Recently, the Reserve Bank of India (RBI) also extended the timings applicable to RTGS transfers by one-and-a-half hours. The new timings - from 8:00 am to 6:00 pm (instead of 4:30 pm previously) - came into effect from June 1.