The Reserve Bank of India (RBI) said on Monday that National Electronic Funds Transfer (NEFT) facility will not be available for at least 14 hours on May 23. “A technical upgrade of NEFT, targeted to enhance the performance and resilience, is scheduled after the close of business of May 22, 2021,” the banking regulator said in a notification. “Accordingly, NEFT service will not be available from 00:01 hrs to 14:00 hrs on Sunday, May 23, 2021,” it further added.
“Member banks may inform their customers to plan their payment operations accordingly,” the regulator said, adding, “NEFT Members will continue to receive event update(s) through NEFT system broadcasts.”
The Real-Time Gross Settlement (RTGS) facility will continue to be operational as usual during this period, RBI said. A similar technical upgrade for RTGS was completed on April 18, the central bank mentioned.
In April, the central bank extended the NEFT and RTGS facilities to non-bank payment system operators. Now, Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms can use NEFT and RTGS modes. The aim is to encourage participation of non-banks across payment systems, RBI said.
“This facility is expected to minimise settlement risk in the financial system and enhance the reach of digital financial services to all user segments. These entities will, however, not be eligible for any liquidity facility from the Reserve Bank to facilitate settlement of their transactions in these CPSs. Necessary instructions will be issued separately,” a statement by banking regulator mentioned.
“Augmenting non-bank players by bringing RTGS and NEFT to their existing portfolios is a credible move that will help them drive more customer traction and recover from last year’s losses in the wake of COVID-19. Earlier, customers had to rely on banks for these services, but with this initiative, they can use it on other platforms as well. Not only will it help digital players ramp up sales and revenues, but it will also provide them with a new opportunity to transform customer experience and serve them more seamlessly,” said Ankur Maheshwari
chief financial officer, MoneyTap.
“After the phenomenal success of UPI transactions, this is a welcome move to include more users across wider payment ranges,” he further added.
“These policy changes where NEFT and RTGS are extended beyond banks and doubling the limit for the payment banks is a real booster for the fintech sector. This will lead to faster financial inclusion with the agility and better user experience offered by the fintechs,” Mayank Goyal, founder and chief executive officer of moneyHOP.
“It certainly furthers the idea of branchless banking and aids the border economic agenda of the Indian government to build a paperless, presences and cashless economy,” Goyal added.