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
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?
National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, customers can transfer funds from their bank to any individual having an account with any other bank 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
NEFT transactions can be initiated 24x7 through Retail Internet Banking, Mobile Banking and Corporate Internet Banking as per below.
- From 8 AM to 4.30 PM - As per customer approval limit
- From 4.30 PM to 6.30 PM - Less than INR 5 crores
- From 6.30 PM to 8 AM - upto INR 1 Crore (Including 2nd and 4th Saturday, Sunday and Bank Holidays)
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).
NEFT is now available 24x7 with 48 half hourly batches.
Bank will be processing all inwards transactions 24x7.
- 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 intimated 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
- Facility available 24x7 on Internet (Retail & Corporate) and Mobile Banking Channels w.e.f. 16th December 2019
- 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: