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NEFT

Digital advancement has made life simpler. Technology backed by high-speed internet has certainly been an enabler. There’s a paradigm shift in the way we transact today and transferring money isn’t complicated as it used to be.

With National Electronics Fund Transfer or NEFT transferring money is quick and easy. NEFT has paved the way for big fund transfers online. So, let’s know more about NEFT.

What is NEFT?

NEFT is a nation-wide payment system facilitating one-to-one funds transfer. With NEFT 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.

Your banks need to be a part of the NEFT funds transfer network and the system must be NEFT enabled for the designated bank branch. The list of bank-wise branches which are participating in NEFT is provided in the website of Reserve Bank of India at http://www.rbi.org.in/scripts/neft.aspx

The key features of NEFT and the process:

  • Batch Processing Settlement
  • The settlement of fund transfer requests in the NEFT system is processed in batches on a half-hourly basis and not on a real-time basis like Real-Time Gross Settlement (RTGS).

    There are 23 half-hourly settlement batches in all that run from 8:00 am to 7:00 pm on all working days including working Saturdays of the week In case if the transaction is received after the cut-off time, it gets processed on the next working day.

  • Settlements are cleared through a central clearing centre
  • The settlement of funds between two bank accounts situated in any geographical area within the country takes places centrally at Mumbai through the NEFT Clearing Centre (operated by National Clearing Cell, Reserve Bank of India, Mumbai).

  • No Transactional limits and Nominal Fees Charged:
  • Although there is no minimum or maximum limit on the amount of funds that could be transferred using NEFT, there is a limit of Rs 50,000/- per transaction for cash-based remittances within India and for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme.

    There are no charges for NEFT Transactions

How to transfer money through NEFT?

To execute a NEFT transaction, the process followed is:

  • If you are the remitter, you need to fill a NEFT application form providing the beneficiary details such as name, bank and branch name, Indian Financial System Code (an alphanumeric code used to identify a particular bank), account type, account number, and the amount to be remitted. By doing so, you, the remitter, authorise your bank branch to debit the account and transfer the amount to the beneficiary.
  • The originating bank branch prepares and sends a message to its pooling centre, also known as the NEFT Service Centre.
  • The pooling centre then forwards the message to the NEFT clearing centre to be included in the available batch.
  • The NEFT clearing centre sorts fund transfer destination-wise and prepare to account entries to receive funds from the originating banks (debit) and give (credit) the funds to the designated bank. And after that, bank-wise remittance messages are forwarded to the destination bank through their pooling centre (NEFT Service Centre).
  • The destination banks receive the inward remittances messages from the Clearing Centre and pass on the credit intimation to the beneficiary customers’ accounts.

The beneficiary is intimidated about the credited amount to his account within two business hours from the batch in which the transaction was settled. However, for whatever reason, if the transaction wasn’t credited into the beneficiary’s account, the destination bank will return the transaction (to the origination bank branch) within two hours of completion of the batch in which the transaction was processed.

Benefits of NEFT:

  • Eliminates the need to send physical cheque or demand draft to the beneficiary
  • No need to worry about loss/theft of physical instrument or likelihood of fraudulent encashment
  • Reduced paperwork
  • Highly cost effective
  • You get a confirmation of the remittance via SMS or email within two hours
  • Comfort to transact from anywhere (provided you choose internet banking or mobile banking as the mode)
  • Facilitates near-to real-time fund transfer securely
  • Aids better control over finances

It is for these reasons that NEFT is a popular medium to transfer funds today.

You can initiate a NEFT transaction using either of the following modes:

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