National Electronic Fund Transfer (NEFT) is a nation-wide payments system that allows 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. Let us learn about the how NEFT operates in India and what benefits it offers. Let us find out what is NEFT.
What is NEFT Process?
Stated simply, if an individual wishes 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 given 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. The NEFT system also facilitates one-way cross-border transfer of funds from India to Nepal under the Indo-Nepal Remittance Facility Scheme.
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 a NEFT transfer. Just enter the amount to be remitted and send.
NEFT works on a deferred settlement basis which means the transactions are carried out in batches. There are 23 half-hourly batches starting from 8 am to 7 pm on every working day.
Who can make NEFT transaction?
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 a 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.
What is NEFT Transfer Limit?
There is no upper or lower limit on the amount that can be transferred via NEFT. 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 few seconds. However, when such transfers take place between different banks, the settlement time could be longer.
What else can you do with NEFT service?
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. Also, 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’s time 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 provide assurance to both the parties.
NEFT vs RTGS
RTGS stands for Real Time Gross Settlement. Under this system, the beneficiary bank gets transfer instructions immediately. The settlement is gross, meaning that each transaction takes place individually. Such payments are final and cannot be revoked.
The only difference between NEFT and RTGS is that unlike in RTGS, the settlement of funds takes place in batches. Hourly time slots are fixed for the purpose and the settlement is allotted to one such time slot.
Should you use NEFT?
One of the best upsides of fund transfer through NEFT is that you have a legal record of a transaction which can be accessed at any time. This comes in use, in case of any dispute between parties or between authorities. In general, considering the ease of transactions with NEFT, it is highly advisable to make use of it. You can now easily use this fund transfer process after knowing what is NEFT.