National Electronic Funds Transfer (NEFT) is a widely used electronic payment system in India that enables individuals and businesses to transfer funds between bank accounts. NEFT is operated and managed by the Reserve Bank of India (RBI) and is available across all banks in the country. Here are detailed notes on NEFT:
1. Transaction Process:
- Initiator: The person or entity initiating the fund transfer is known as the “Remitter.”
- Beneficiary: The person or entity receiving the funds is called the “Beneficiary.”
2. NEFT Timings: NEFT operates on a batch processing system. Transactions are processed in hourly batches, and the service is available on all working days of the banks during their business hours.
3. NEFT Settlement Cycles: As of my knowledge cutoff date in September 2021, NEFT had half-hourly settlement cycles. However, it’s important to note that RBI has introduced 24×7 NEFT services in December 2019. This means NEFT transactions can now be initiated and settled in real-time, including weekends and bank holidays.
4. NEFT Transaction Limits: As per RBI guidelines, there is no minimum transaction amount for NEFT transfers. However, there is an upper limit on the maximum transaction amount for individual customers, which may vary from bank to bank.
5. NEFT Charges: The RBI has mandated that banks cannot charge any fees on inward NEFT transactions received by customers. However, banks may levy nominal charges for outward NEFT transactions initiated by customers.
6. Process of NEFT Transaction:
- The Remitter fills out a NEFT application form, providing the Beneficiary’s bank account details, including the bank’s Indian Financial System Code (IFSC), account number, and the amount to be transferred.
- The Remitter submits the filled application form to their bank.
- The Remitter’s bank initiates the NEFT transaction and sends the request to RBI’s NEFT switch.
- RBI’s NEFT switch batches the transactions and forwards them to the respective Beneficiary banks.
- The Beneficiary bank credits the amount to the Beneficiary’s account.
7. Advantages of NEFT:
- Widely Available: NEFT is available across all banks and branches in India.
- Secure: NEFT transactions are secure and adhere to strict RBI guidelines and protocols.
- Convenient: Customers can initiate NEFT transactions through various channels, such as internet banking, mobile banking, and visiting the bank branch.
8. Limitations of NEFT:
- Time-Consuming: NEFT operates in batches, so the funds may not be instantly credited to the Beneficiary’s account, especially during non-working hours.
- Limited Operating Hours (pre-24×7 NEFT): Prior to the introduction of 24×7 NEFT, NEFT had limited operating hours during bank working days only.
9. NEFT Refunds: In case of failed or rejected NEFT transactions, the Remitter’s bank is responsible for refunding the amount to the Remitter’s account.
NEFT is a popular and reliable electronic payment system in India, facilitating safe and efficient fund transfers across the country. With the introduction of 24×7 NEFT services, customers can now enjoy the convenience of real-time transactions at any time, making it even more beneficial for individuals and businesses.