National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained by the Reserve Bank of India (RBI). Started in November 2005, the setup was established and maintained by Institute for Development and Research in Banking Technology. NEFT enables bank customers in India to transfer funds between any two NEFT enabled bank accounts on a one-to-one basis. It is done via electronic messages.
National Electronic Fund Transfer (NEFT) is a nation-wide payments system that allows the transfer of funds from one bank’s account to another. With an increased focus on online banking, NEFT has become one of the most popular ways of transferring funds. Since it can electronically transfer funds from any bank branch to any individual, it has eliminated the need to visit a bank branch for transfer of funds.
Stated simply, if an individual wish to transfer a sum of money from his bank account to another person’s bank account, he can do so through the process of NEFT, instead of withdrawing money and then paying it in cash or by writing out a cheque.
- The main benefit offered by NEFT is that it can transfer funds from any account of any branch to any other bank account located at any place
- The only condition is that both the sender and receiver branches should be NEFT-enabled.
- You can check the list of NEFT-enabled bank branches on RBI’s website or just call your bank’s customer service to confirm the same.
- NEFT system also facilitates the one-way cross-border transfer of funds from India to Nepal under the Indo-Nepal Remittance Facility Scheme.
NEFT works on a deferred settlement basis which means the transactions are carried out in batches. Earlier, NEFT transactions were available from 8:00 AM to 6:30 PM from Monday to Friday only. However, RBI has regularised that NEFT transactions will be available 24*7 on all days of the year, including holidays.
Also, after usual banking hours, NEFT transactions are expected to be automated transactions initiated using ‘Straight Through Processing (STP)’ modes by the banks.
How to Transfer Funds through NEFT?
One needs to follow the procedure given below to transfer funds using NEFT:
Step 1: Login to your online banking account using your login ID and password.
Step 2: Go to the NEFT Fund Transfer Section.
Step 3: Add beneficiary by entering his/her name, bank account number and IFSC Code.
Step 4: Once the beneficiary is successfully added, you can initiate an NEFT transfer. Just enter the amount to be remitted and send.
The Reserve Bank of India provides a list of participating bank branches, which are NEFT-enabled, meaning that one can conduct NEFT transactions through these bank branches. As has already been said, any individual, firm or corporate, who holds a bank account with a participating branch, can make an NEFT transfer at any time.
However, if someone does not hold a bank account, even he can make a cash deposit at an NEFT-enabled branch, provided that he furnishes complete details regarding his address, email ID, contact number, and more to the bank. Such transfers shall be restricted to a maximum amount of Rs. 50,000.
NEFT Transfer Limit
There is no upper or lower limit on the amount that can be transferred via NEFT. You can begin with an NEFT transfer with Rs. 1. There is only a single limitation on the amount of one-time transaction through cash mode, which is Rs. 50,000.
Depending on each bank, timings and settlement period for each transaction could be different. Ordinarily, if funds are transferred within the same bank account, one can expect to receive them within a matter of a few seconds. However, when such transfers take place between different banks, the settlement time could be longer.
Charges applicable to NEFT
(i) There are no charges associated with inward transfers i.e. no charges for recipient/beneficiaries
(ii) Fund transfer charges applicable to remitter are: (GST excluded)
- 2.50 on transfers up to Rs. 10,000
- 5 on the transfer of Rs. 10,000 to Rs. 1 Lakh
- 15 on the transfer of Rs. 1 Lakh to Rs. 2 Lakh
- 25 on the transfer of more than Rs. 2 Lakh
Now that you know what is NEFT, it is worth mentioning that the service of NEFT can be used to make payments for loans, EMI’s, credit cards dues and more. Therefore, the service of NEFT is not restricted to personal fund transfers alone.
Benefits of using NEFT
In the process of NEFT, you just have to enter the details of the beneficiary for the first time after which you can just select the beneficiary from the list, enter the amount and send.
Take a look at some of the benefits of NEFT transactions that could make your daily transactions simpler:
- No physical presence of either party is required to conduct a transaction
- No physical instrument needs to be transferred at any point of time, between the conducting parties, to conclude the transaction
- No visit to the bank is required, as long as a person holds a valid bank account
- Shortcomings of a physical instrument are easily overcome. This means that NEFT has completely omitted instances of physical damage of any monetary instruments, its theft or forging
- NEFT is simple and efficient – it can be done in under a minute and hardly involves any major formality
- Confirmation of a successful transaction can be easily received and viewed through email and SMS notifications
- Internet banking can be initiated and conducted from any place. This means that a person does not need to be present at a particular location to make NEFT transactions
- Real-time transactions assure both the parties