Following complaints from customers, the Reserve Bank has made it clear to banks that there are no restrictions in allowing use of electronic modes for various transactions including repayment of loans.
"It is, therefore, advised that all banks should allow the customers to choose National Electronic Funds Transfer (NEFT) as one of the electronic modes of making payment towards loan EMIs or repayments etc." the RBI said in a notification today.
Launched in 2005, the NEFT or an electronic transfer of funds has been occupying an important place in the payment system space of the banks.
"The system is meant for one-to-one funds transfer and can be used for transferring funds to beneficiaries (individual, institutions etc) and no restrictions have been placed thereon," the notification said.
The central bank, it said, has received some complaints from customers regarding non-acceptance of NEFT for credit to loan accounts causing inconvenience to them.
"On examination of the matter, it was observed that only a few banks were following this restrictive practice. These banks, however, were willingly taking electronic clearing service (ECS) as one of the modes for the repayment," it said.
Early this week, the RBI had allowed regional rural banks (RRBs) and cooperative banks also to participate in the centralised payment systems.
{{/usCountry}}Early this week, the RBI had allowed regional rural banks (RRBs) and cooperative banks also to participate in the centralised payment systems.
{{/usCountry}}"The phenomenal growth in the system (especially in NEFT), both in terms of branch coverage and volume or value of transactions handled, reflects the acceptability and popularity of the system," it added.