National Electronic Funds Transfer (NEFT) is an electronic fund transfer system that was established in November 2005 by Institute for Development and Research in Banking Technology (IDRBT). The system was setup with an objective to promote electronic fund transfers between two NEFT-enabled banks.
It may be noted that the Indian banking sector has been growing tremendously and has been open to the innovations to adopt digital payment system to enhance overall banking experience. The payment system in a country like India have always been dominated by paper-based fund transfers where a person has to personally visit the bank branch in order to initiate a transfer. However, ever since NEFT system was introduced, the sector has witnessed a huge boon in digital payment transactions. In fact, out of total payment transactions, 75% are completed via electronic mode.
The statistics are clear sign that people have widely adopted the new-age payment system. NEFT transactions are way more convenient and hassle-free. The payments are settled in half hourly batches throughout the week, which clearly states that a remitter or beneficiary doesn’t have to wait for days to settle the payment transfer. As of November 2019, there are over 200 banks with NEFT-enabled facilities.
Role of the Reserve Bank of India in NEFT:
The Reserve Bank of India (RBI) has played a significant role in introducing digital payment systems, which has encouraged the general masses to indulge in e-banking system. The RBI has directed all the major banks to route the high value transactions via digital mode of payment. In fact, the RBI has also directed the banks to curb the NEFT charges after the facility was made available 24*7. Earlier, NEFT transactions were only available between 8 am to 7 pm on weekdays and from 9 am to 1 pm on Saturdays except on Sundays and bank holidays. However, in a circulation issued by the RBI in December 2019, it was stated that the service would now be available throughout the week.
Benefits of NEFT transfers:
Safer transactions – When it comes to monetary matters, an individual wants to be every bit sure of the safety and security of the transactions. As NEFT system is controlled by the Central Bank, the risk of fraud is minimized. The payments are settled via highly secured and encrypted platform.
Time saver – The days are gone long back when an individual has to personally visit the bank, stand in long queues and fill lengthy forms in order to initiate a fund transfer. However, with digital evolution, fund transfer has become a time saver as one can initiate the payment without even leaving their comfort zone or sparing some time out of the busy schedule. Just log on to net banking and initiate the payment transfer. It’s just that simple and efficient.
Low processing charges – As directed by the RBI, no NEFT charges would be levied to the beneficiary for receiving payment transfers via electronic mode. This makes the transfer extremely low cost measure. However, banks could levy minimum NEFT charges to the remitter in case of cash remittance or online transfers.
Highly dependable – Being an integralr part of net banking services, NEFT is a highly dependable mode of payment transfers. Payments are initiated and settled via an online channel only and thus, the system is extremely safe and dependable.
Quick settlements – There is no need to wait for days in order to settle a single payment transfer. Fund transfers via NEFT system makes it quite easy and efficient to settle the payments immediately. It hardly takes 30 minutes to settle a payment to the beneficiary’s bank account. In case of any error or transaction failure, funds will be reversed to the remitter’s bank account within 30 minutes.
Easy tracking – While initiating fund transfers via offline mode, it’s certainly not possible to track the payment status. However, when doing NEFT transfers, it’s easy to track the status using unique reference number. Upon transaction failure or in case of any error, you can easily reach out to the customer care and request tracking of the transaction. In fact, once the payments are settled, the originating bank sends alert or notification via SMS or email to acknowledge the receipt of payment.
FAQs related to NEFT:Can I initiate NEFT payments offline?
Yes, a person can complete the NEFT payment transfers via cash remittance facility. All they need to do visit their bank branch and fill out NEFT form with the details of beneficiary. The beneficiary’s bank should be NEFT-enabled to receive the payments. However, the maximum limit of cash remittance transfers is Rs.50000 per transaction.
Is NEFT available 7 days of the week?
Earlier NEFT was available only between the working hours of the bank and the service wasn’t available on Sundays and bank holidays. However, after notification issued by the RBI in December 2019, the service is now available 7 days of the week regardless of weekends and bank holidays.
What details are required to initiate NEFT payment?
In order to process the NEFT fund transfer, a remitter is required to provide beneficiary’s details like name, bank account number, and IFSC code alongside the amount of transactions.
Why IFSC code is required in NEFT transfers?
Indian Financial System Code, aka IFSC, is an 11-digit alphanumeric unique code issued to the banking institution. The first four character of the code represents the bank name, fifth remains zero, and the remaining 6 characters signify the branch code. Therefore, it is mandatory to provide IFSC code of the beneficiary’s bank to identify the bank and the branch involved in the transaction.
Is there any NEFT charges?
Although banks don’t levy any charges to the beneficiary account, however, a person initiating the transfer has to pay minimum NEFT charges, subject to the amount of transaction.
For transactions up to Rs.1 lakh, maximum up to Rs.5 would be charged by the remitting bank, while for transactions above Rs.1 lakh, but less than Rs.2 lakh, Rs.15 would charged. For transactions exceeding Rs.2 lakhs, Rs.25 would be levied to the remitter’s bank account. However, NEFT charges could vary from bank to bank.