written by Khatabook | August 23, 2021

NEFT: Meaning, Timings, Transfer Procedure, and Benefits

NEFT stands for National Electronic Funds Transfer which is an online mode of payment system. NEFT helps you transfer funds from one bank account to another bank account. Nowadays, the demand for online banking has increased. NEFT was introduced by the Reserve Bank of India (RBI) in November 2005 for the ease of transfer of online funds. 

What is NEFT?

NEFT is becoming one of the popular ways of electronic transfer of funds. It was done by the RBI to mandatory integrate the Special Electronic Fund Transfer System (SEFT) to NEFT. You can transfer funds all over India. It is a process of direct one-to-one payment across the country. A bank branch must be NEFT-enabled, allowing customers to transfer funds. So, any individual/HUF, a company, can transfer online funds if their bank branches have NEFT.

You can also make any payment to the Ministry of Corporate Affairs (MCA) through NEFT. This was introduced to avoid delays in the payment method. You can also make payments for loans, credit card dues, EMIs, and more through the NEFT service.

Process of NEFT:

Instead of taking out cash or writing up a cheque, any individual can transfer money through NEFT if they wish to do so.

  • One of the benefits of NEFT is that the transfer of funds can be done from any bank/bank branch account to another bank/bank branch account located at any place.
  • Both the sender and recipient's bank must be NEFT-enabled.
  • To check if your bank is NEFT-enabled or not, you can check from the lists of banks declared as NEFT-enabled on the official website of RBI. You can also call your bank's customer service to confirm.
  • You can also transfer funds through NEFT across borders from India to Nepal under the Indo-Nepal Remittance Facility Scheme.

Timings of NEFT:

The new NEFT payment system remains active 24*7 for 365 days a year, including holidays. So you can make payment at any time or day of the week at your convenience.

Earlier, the NEFT transactions took place at fixed slots. The new specified NEFT time slots are: 

  • Monday to Friday-  8:00 a.m to 7:00 p.m. (6:30 p.m. in some banks)
  • Saturday- 8:00 a.m. to 12 p.m. (1:00 pm or 6:30 p.m. in some banks)

The RBI introduced the new timings of NEFT to promote more online transactions than offline. It will further facilitate the global integration of Indian financial markets.

You can place the NEFT requests at any time in the bank. The transactions are sent to a queue and are processed once every hour. After the usual banking hours, the NEFT transactions get automated through the Straight Through Processing (STP) banking mode.

Initiating Transfer in NEFT:

You can initiate the transfer of funds th rough NEFT from a minimum balance of Re 1. The RBI has set no maximum limit. But, if someone does not hold an account of a particular bank and still wants to do a cash transfer. Then, their limit of transfer shall be restricted to Rs 50000. They must provide their details, including name, contact number, e-mail address, and other necessary details to the bank. Also, some banks may fix their NEFT transfer limit s for their bank branches' account holders. 

So, different banks may follow different timings, settlement periods, maximum limits, etc. In most cases, when the funds are transferred within the same bank account, the transactions are completed taking less time. Transactions between other banks may get completed within longer hours.

Mandatory information of the remitter of NEFT:

The sender or remitter must furnish the following details:

  • Amount of the transaction
  • Beneficiary Customer Account Number
  • Name of the beneficiary bank
  • Beneficiary Customer Account Name
  • Sender to receiver information, if any
  • Beneficiary Branch's IFSC code
  • Customer Mobile No. or Email-id.
  • Purpose of transaction

If you do not know the IFSC code of the beneficiary's bank, you can search it online. Provide the bank name, location and branch name. The IFSC code will get automatically updated. The IFSC codes are also mentioned on the leaves of the cheque book. The amount will be credited as per your bank account number in electronic mode. Hence, you have to be cautious while providing the bank account number.

Also Read: IMPS (Immediate Payment Service)- What is IMPS Transfer, IMPS Payment, Timings & Limit

Steps to Complete NEFT Procedure:

To complete your online fund transfer procedure through NEFT, follow the given steps:

  1. Log in to the online/internet banking page of your NEFT-enabled bank branch.
  2. On the homepage, go to the 'Funds Transfer' option.
  3. Select the 'NEFT' option on the fund's transfer page. For example, in State Bank of India-

 

  1. Choose the beneficiary's name from the list to whom you are sending the money. You will have to enter his bank account number and IFSC code.
  2. If you wish, you can add a new beneficiary's name from the 'Add Beneficiary' option. You will have to enter his name, account number, IFSC code, bank branch name, type of account, etc.

  1. You can verify the details and confirm them.
  2. After entering the beneficiary's name, you will get a 4-digit OTP on your registered mobile number. Enter the OTP and confirm the details of the beneficiary.
  3. Once the beneficiary is successfully added, you can initiate your transfer. Enter the amount, bank account, name of the beneficiary, and send the amount.

If the money cannot get credited for any reason, the beneficiary's bank has to return the money. This return must take place within the next 2 hours to the remitting bank. After receiving money, this amount gets credited to the remitter's (sender's) bank. 

Charges applicable to NEFT transactions:

There are no charges applicable for the recipient/ beneficiaries, i.e., the inward transfers at the recipient's banks. Further, there are no charges applicable on fund transfers through NEFT initiated online via internet/ mobile banking channels.

The fund transfer charges applicable to the remitter/ sender are:

Transfer

Cost per transaction

Up to Rs 10 thousand

Rs 2.50 per transaction

From Rs 10 thousand to Rs 1 lakh

Rs 5 per transaction

From Rs 1 lakh to Rs 2 Lakh

Rs 15 per transaction

Amount exceeding Rs 2 Lakh

Rs 25 per transaction

The transaction charges mentioned above are excluding the GST amount. They may vary depending upon the bank or bank branch.

Benefits of NEFT:

Transactions through Neft makes your life simpler. Some of the benefits of doing an NEFT transfer are mentioned below:

  • No need for physical presence for any of the parties involved to complete a transaction.
  • No requirement for a physical instrument like cheques or demand draft is to be transferred at any point during the transaction.
  • You do not have to visit the bank to transfer funds through NEFT. If you have a valid bank account, you can complete your transaction online.
  • Any chance of physical damage made to instruments is completely omitted, either due to theft or forging.
  • It is a simple and efficient mode of transferring funds. It hardly takes a few minutes to transfer funds through online mode. 
  • If the transaction were successful, you would get a notification on your registered mobile number.
  • Transactions through NEFT can be done from any place and at any time of the year.
  • It is an economical way of money transfer as reasonable charges are incurred on it.
  • NEFT is built on a secure platform, and the multi-step verification makes it safer.
  • It takes place in a paperless mode.
  • NEFT transfer is available 24*7.

Besides the benefits mentioned above, the fund transfer through NEFT gives you a legal record of the whole transaction. It can be accessed at any time and can be used to solve disputes between the two parties.

NEFT vs RTGS:

Another mode of fund transfer online is Real Time Gross Settlement (RTGS). With RTGS, the payment is credited to the recipient's account on a real-time basis or immediately. This mode was also introduced by RBI and has almost the same benefits as NEFT. However, there are still some differences that are defined below:

NEFT

RTGS

In NEFT, the settlements are completed in a batch, hourly or half-hourly.

Settlements in RTGS occur in a real-time mode.

The minimum amount in NEFT has to be Re 1.

The minimum amount in RTGS has to be Rs 2 Lakh.

In NEFT, the funds may take hours to get processed from the settlement of a transaction.

The beneficiary gets the amount immediately after the transfer of funds in RTGS

NEFT is meant for transactions having low or medium values.

RTGS is meant for transactions having higher values

NEFT is available on all days.

RTGS facility is available from Monday to Saturday.

The service charges applicable on RTGS through online channels are NIL. However, there is a reasonable amount of service charge applicable when a transaction takes place through banking channels such as internet banking, ATMs etc:

  • Transactions from Rs 2 lakh to Rs 5 lakh- Rs 30 per transaction
  • Above Rs 5 lakhs- Rs 55 per transaction.

The above charges are given excluding the GST amount. 

Note: There are no service charges applicable on inward transactions, i.e., the recipient is not required to pay any charges. Just like NEFT, transfer through RTGS is done only by RTGS-enabled banks/ bank branches.

Also Read: Net Present Value- Explained 

Conclusion

Banking has become an essential part of our life. It may take up a lot of time from our daily lives as too much time is spent standing in queues, filling forms, etc. These problems are now solved through the different online payment modes, and NEFT is one of them. 

You can complete your NEFT transactions by referring to the above steps and other details. Keep reading Khatabook for more updates and information.

FAQs

Can NEFT transactions take place on a Sunday?

Yes. With the new NEFT money transfer timings, you can complete transactions on a Sunday. But, the money will get credited to the recipient's account only on the following working day.

Can I make online payments through NEFT?

Yes. With NEFT, You can also pay online payments, EMIs, Credit card dues in addition to money transfers.

Who should be contacted if there is a non-credit or delay in credit of the money to the beneficiary's account in an NEFT transaction?

For a situation of delay or non-credit of the funds, you may contact your bank or bank branch or the Customer Facilitation Service Centre of the banks. You can also contact the phone number and email-id of your bank from its official website. If the issue is still not resolved, you can contact-The Chief General Manager.

Reserve Bank of India

Customer Service Department

1st Floor, Amar Building, Fort

Mumbai– 400 001 (Telephone 022-27560746)

Can I transfer money outside of India?

No. With the NEFT facility, you cannot transfer your money outside India. This facility allows transferring funds within the Neft-enabled bank branches in India.

What is the difference between NEFT and RTGS?

RTGS is an instant real-time mode to transfer funds immediately. Transfer of funds through NEFT gets completed in batches.

Which is a faster mode of payment- RTGS or NEFT?

NEFT sometimes take up to 12 hours to complete, while RTGS is an instant mode to transfer money. So, RTGS is a faster mode than NEFT.

What can be the maximum time limit for the funds to get credited to the beneficiary's account via NEFT?

It may take up to 2 working days for the funds to get credited to the beneficiary's bank account.

What is the maximum limit to transfer money through NEFT?

There is no maximum limit as such specified through NEFT. However, some banks or bank branches may impose a maximum limit for any transaction.

Is NEFT available on all days?

Yes. The facility of NEFT is available 24*7, 365 days a year (including holidays).

How can I know if my bank branch is NEFT-enabled?

The RBI provides a list of bank branches that provide you with the facility of NEFT. They are the participating bank branches that allow you to transfer funds through Neft.

Are there any geographical restrictions on the NEFT transfer?

No. Since it is a centralised system of fund transfer, there is no restriction imposed. The bank accounts that are sending and receiving money are operated at one centre in Mumbai. The individual branches can be located anywhere across the country

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