Big news for bank customers as RBI issues alert for NEFT money transfer facility

The Reserve Bank of India released a notification on Monday saying that National Electronic Funds Transfer (NEFT) facility will remain available for 14 hours on Sunday (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. NEFT Members will continue to receive event update(s) through NEFT system broadcasts," said the RBI.

The RBI notification, however, said that the Real-Time Gross Settlement (RTGS) facility will function as usual during this period. It may be recalled that A similar technical upgrade for RTGS was completed by the RBI on April 18.

It is to be noted that the NEFT and RTGS facilities were extended by the RBI to non-bank payment system operators in April 2021. Now, NEFT and RTGS modes can be used by Prepaid Payment Instrument (PPI) issuers, card networks, White label ATM operators and Trade Receivables Discounting System (TReDS) platforms. According to RBI this has been done to encourage participation of non-banks across payment systems.

“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.