What Is NEFT: Full Form, Time, Limits, Charges & How It Works

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What is NEFT?

The full form of NEFT is National Electronic Funds Transfer, an electronic payment system in India that enables seamless fund transfers between NEFT-enabled bank accounts across participating banks. This system operates on a Deferred Net Settlement basis, settling transactions in 30-minute batches around the clock (24x7x365).

Operated by the Reserve Bank of India (RBI) since 2005, NEFT provides a secure, economical, and reliable way to transfer funds online, without visiting a bank branch.

NEFT transfers are widely used for salary disbursement, bill payments, and online purchases, making it a convenient and efficient choice for both individuals and organizations.

How NEFT Transfer Works?

NEFT means National Electronic Funds Transfer. To initiate a transfer, you need to provide your bank with the recipient’s account details and the amount to be transferred. Your requests are then batched and sent to the RBI’s central system, which sorts and settles them, crediting the recipient’s account.

Here is the step-by-step process:

Step 1. Initiation

To initiate an NEFT (National Electronic Funds Transfer), the sender needs to provide the beneficiary’s details, like the beneficiary’s name, bank name, branch name, account number, and IFSC (Indian Financial System Code) to their bank. NEFT can be initiated by logging in to Internet banking, mobile banking or by visiting a bank branch in person.

Step 2. Processing

After the sender initiates the transfer, the bank prepares a detailed message containing the necessary transaction details, like account number, bank name, IFSC code, etc. and forwards it to their NEFT Service Centre. These centres act as a central hub for processing NEFT transactions. It collects and pools all NEFT transactions received from various branches and customers.

Step 3. Batching

The NEFT Service Centre groups the transactions destined for different banks together into batches after collecting and pooling them. Batches are settled at about the same time every hour, helping set off and settle transactions efficiently. Batching facilitates the banks to settle transactions easily with the respective banks and handle large amounts of money.

Step 4. Clearing and Settlement

The NEFT’s central system, which acts as a clearing house and is managed by the RBI, receives transaction batches from all the service centres. It sorts the batch of transactions based on the beneficiary’s bank. It directs settlement instructions to both the sender’s and the beneficiary’s banks. This process ensures a smooth transfer of funds between banks.

Step 5. Funds Movement

Based on the settlement instructions received from the NEFT’s central system, the sender’s bank begins a debit transaction and deducts the specified amount from their account. The RBI is in charge of a country’s financial stability, and these funds are transferred to it. It holds the funds temporarily before forwarding them to the beneficiary’s account.

Step 6. Crediting Beneficiary

The RBI sends the funds to the beneficiary’s bank, which credits the specified amount to the beneficiary’s account. This ensures the funds are securely delivered to the recipient.

Step 7. Confirmation

Both the sender and the beneficiary receive confirmation messages from their respective banks regarding successful NEFT transactions.

Related Read: What is Stop Payment and How Does it Work?

Advantages and Features of NEFT Transfer

Here are some of the benefits of using NEFT (National Electronic Funds Transfer):

24/7 Availability: Transfer money anytime throughout the year.
Pan-India Coverage: Send funds to any account in India.
Convenience: Initiate transactions from anywhere (online banking, mobile banking).
No Transaction Limit: The RBI allows you to transfer any amount daily, subject to your bank’s specific limits.
International Transfers: Send money to Nepal (may have additional requirements).
NRE/NRO Accounts: Transfer funds to Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts.
No Branch Visits Required: No need to visit your bank branch to initiate an NEFT transfer.
Faster than Traditional Methods: NEFT transfers are generally processed faster than checks.
Security: NEFT secure electronic network regulated by the RBI, minimizing the risk of theft or loss associated with cash transfers.

Who Can Use National Electronic Funds Transfer (NEFT) Transfer?

Individuals, businesses, and organizations with an account at an NEFT enabled bank in India can use NEFT to transfer money to someone else with an account at a different NEFT enabled bank in India.

Here’s a breakdown of who can use NEFT (National Electronic Funds Transfer) for their money transfers:

1. Individuals with bank accounts

If you maintain a savings or current account with a bank that is part of the NEFT network (which includes most banks in India), you can initiate NEFT transfers to other accounts.

2. Companies and corporations

Businesses also have the option to utilize National Electronic Funds Transfer (NEFT) for transferring funds between accounts or to vendors and clients.

3. Individuals without bank accounts

Even If you do not have a bank account, you can still utilize NEFT for money transfers. You will need to visit a branch of a bank participating in NEFT and deposit cash. The maximum amount you can transfer through this method is ₹50,000 per transaction.

Details Required for NEFT Fund Transfer

To complete an NEFT (National Electronic Funds Transfer) fund transfer, make sure to have the following details:

Beneficiary’s Name
Beneficiary’s Bank Name
Beneficiary’s Branch Name
Beneficiary’s Account Type (e.g., Savings, Current)
Beneficiary’s Account Number
Beneficiary’s Branch IFSC Code
Amount to be Transferred
Sender and Beneficiary Legal Entity Identifier (LEI) – required for eligible transactions, typically for business or corporate transfers
Remarks or Payment Notes (optional) – for record-keeping or clarification on transaction purpose.

What Are the National Electronic Funds Transfer Charges?

NEFT transactions are typically free for the receiving bank. Since July 2019, the Reserve Bank of India (RBI) has eliminated processing fees for sending banks. Additionally, many banks offer free online NEFT transfers for savings account holders starting from January 2020.

However, the originating bank can charge its customers for outward transactions based on the following maximum fees:

For transactions up to ₹10,000: The charge should not exceed ₹2.50 (+ applicable GST).
For transactions above ₹10,000 and up to ₹1 lakh: The charge should not exceed ₹5 (+ applicable GST).
For transactions above ₹1 lakh and up to ₹2 lakhs: The charge should not exceed ₹15 (+ applicable GST).
For transactions above ₹2 lakhs: The charge should not exceed ₹25 (+ applicable GST).

These charges may vary depending on the bank’s policies and are subject to change as per the RBI’s directives. It is advisable to check with your bank for the most current fees. For information on NEFT transfers to Nepal, please refer to the RBI website

What Is the NEFT Transfer Time?

As per the Reserve Bank of India (RBI), NEFT transfer timings are 24/7 and 365 days a year, allowing for seamless online transactions. Key NEFT transfer timings include:

Working Days (7:00 AM to 7:00 PM): No transaction limit.
After Hours (7:00 PM to 7:00 AM): Transactions are allowed up to ₹1 crore per transaction.
Weekends and Holidays: NEFT services are available 24/7, with a limit of ₹1 crore per transaction.

NEFT transactions are processed in half-hourly batches. For example, a NEFT transfer initiated at 11:02 AM will be settled by 11:30 AM, while one requested at 11:25 AM will also be processed by 11:30 AM.

For branch-based NEFT services, the typical timings are 8:00 AM to 7:00 PM from Monday to Friday, and 8:00 AM to 6:45 PM on Saturdays. However, on the 2nd and 4th Saturdays and Sundays, NEFT services are not available at bank branches, though online services remain accessible.

Related Read: What is the IMPS Transfer Limit Per Day?

Factors Affecting NEFT Settlement Time

NEFT transfers usually happen in batches, so a few key things can affect how fast your money moves:

1. Cut-off Timings:

NEFT payments are processed in batches at fixed cut-off times set by the Reserve Bank of India. If you send money just before a cut-off, it’ll go through quickly. But if you miss it, your transfer waits for the next batch.

2. Bank Operational Hours:

Even though NEFT runs 24×7, some banks process transactions only during their working hours. If you initiate a payment outside those hours, it may be processed the next working day.

3. Technical Glitches:

Sometimes, system downtime or network issues at the bank or the RBI’s end can delay transactions.

4. RBI Guidelines:

RBI occasionally updates NEFT rules or timings. During such changes, settlement times might temporarily vary.

NEFT Transfer Limit

The Reserve Bank of India (RBI), which oversees the National Electronic Funds Transfer system, does not establish any minimum or maximum limits for fund transfers. This means that, in theory, you can transfer any amount using NEFT. However, individual banks may impose their own limits based on factors such as risk assessment and operational requirements. Therefore, it’s important to check with your specific bank to understand any transfer limits that may apply to your transactions.

How to Transfer Money Through NEFT?

Here is the process you need to follow:

STEP 1: Log in to your bank’s internet banking portal or mobile banking app. Alternatively, visit your bank’s branch to initiate the transfer.
STEP 2: Navigate to the funds transfer section after you have logged in to your bank’s Internet banking portal or mobile application.
STEP 3: Find “NEFT” or “National Electronic Funds Transfer”.
STEP 4: Fill in all the necessary details of the beneficiary, including his/her name, bank account number, IFSC of the bank branch, and the amount that needs to be transferred.
STEP 5: Double-check the beneficiary’s details and the transfer amount to ensure accuracy in the transaction process.
STEP 6: Your bank may require you to provide security information like transaction passwords or one-time passwords to ensure the authentication and safety of your transaction.
STEP 7: After verifying all necessary details, proceed to confirm the NEFT request.
STEP 8: Depending on your bank’s interface, you may be asked to review the transaction details before finalising the transfer.
STEP 9: After confirming the National Electronic Funds Transfer, you can expect to receive an acknowledgement or confirmation message indicating that the transfer request has been initiated successfully.

Remember that NEFT transactions are processed in batches throughout the day. Depending on when you made the request, it may take a few hours for the transfer to be completed.

Once the NEFT is successfully processed, the recipient will receive the funds in his/her bank account.

The recipient’s bank will promptly notify them of the credit transaction after successful processing.

Read More About: How to Transfer Money through NEFT?

Tips for Using NEFT

Here are some tips to follow for a seamless NEFT money transfer:

1. Double-check Beneficiary Details

Confirm the beneficiary’s name, account number, and IFSC code are entered accurately to avoid any issues in the processing of NEFT.

2. Add the Beneficiary Beforehand

Adding recipients upfront through the Internet or mobile banking can save time (if your bank requires it).

3. Schedule NEFT (if available)

Some banks offer the choice to schedule NEFT for future dates, which can help with recurring payments.

4. Know the Transaction Limits

Some banks impose the NEFT transaction limit, remain aware of this and plan accordingly for larger transactions.

5. Consider Transfer Timings

Though the NEFT transactions can be done 24/7, they are processed in batches. Initiate the transactions during banking hours to expedite the transaction.

6. Review Transaction Fees

Depending on the bank and the amount you wish to transfer, be aware of the potential fees associated with NEFT. Know your bank’s charges beforehand.

7. Maintain Transaction Records

Save the confirmation of NEFT for future reference. You may require it as evidence in case of a dispute.

8. Use Secure Channels

Conduct NEFT through authorised bank websites or mobile applications. This will prevent you from phishing and ensure a secure transaction.

9. Beware of Unfamiliar Requests

Avoid initiating NEFT for unknown individuals or companies to prevent potential fraud.

10. Report Errors Promptly

In case of any issues, reach out to your bank immediately for assistance.

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Conclusion

It is crucial to understand NEFT meaning as it is the best and safest mode of transferring funds electronically. With NEFT, transactions are processed in batches throughout the day, and once processed, the recipient will receive the funds in their bank account, with their bank notifying them of the credit transaction. Utilise it as it comes with low charges, can accommodate large amounts of money, and can be conducted throughout the day. Use NEFT to ease funds transfers in your business operations or personal needs.

Frequently Asked Questions (FAQs)

1. What does “NEFT” stand for in Indian banking?

NEFT means National Electronic Funds Transfer. It is a payment system that enables the transfer of funds from one bank account to another on a one-to-one basis.

2. What is the minimum amount required for an NEFT transaction?

There is no minimum amount required for an NEFT transaction. You can transfer any amount, as long as it adheres to your bank’s policies.

3. What is the maximum amount that can be transferred through NEFT?

There is no upper limit for NEFT transactions. However, individual banks may impose their own limits, so it’s advisable to check with your bank for specific details.

4. Do all Banks Provide NEFT Service?

All major banks provide NEFT services. However, there may be some banks that do not offer transactions through NEFT.

5. How much time does it take to settle NEFT transactions?

NEFT transactions usually settle within 1-2 hours, although the exact time may vary depending on the bank’s processing time and the time of day the transfer has been initiated.

6. Can I make a NEFT transaction on the weekend?

Yes, NEFT transactions can be done on weekends. However, the availability of the service may vary depending on the bank and the processing timings.

7. Can NEFT be Cancelled?

Yes, the sender can cancel NEFT transactions before they are settled. The cancellation request needs to be initiated by the sender’s bank, and it can be done either online or by visiting the bank branch.

8. How to know the NEFT sender details?

To know the sender details in National Electronic Funds Transfer, one should know the sender’s bank account number and IFSC code.

9. How to fill out the NEFT form?

A basic National Electronic Funds Transfer form requires the date and the following critical information:

Your bank account details, including your account number, branch name, and IFSC code.
Beneficiary details, including their name, account number, and IFSC code; the amount to be transferred and finally, signing the form to approve the transaction.

10. How to check NEFT Status?

Log in to your Internet banking account and navigate to the fund transfer section. The NEFT transaction status will provide updates or confirmations. Alternatively, contact your bank’s customer service for assistance.

11. Can I schedule NEFT transfers for a future date?

Yes, you can schedule it while adding the beneficiary for the NEFT transfer.

12. How secure are NEFT transactions?

NEFT transactions are secure as they are facilitated by the RBI and are conducted through a secure electronic payment system.

13. What happens if I provide incorrect beneficiary details in an NEFT transfer?

Failure to provide correct beneficiary details for an NEFT leads to the crediting of funds to the wrong account or recipient. However, the amount will be returned to the originating bank within days. To retrieve your money, contact your bank immediately and provide the necessary information.

What Is NEFT: Full Form, Time, Limits, Charges & How It Works

What is NEFT?