What Is NEFT?

Posted on Monday, May 20th, 2024 | By IndusInd Bank

Imagine this: you are on your way to the office on the train, and you realise that you must pay the maintenance bill by the end of the day. Instead of panicking, you can take out your phone and pay with the help of online banking. Mobile banking apps provide the same services as regular banking services, including opening asavings account and various payment options. One of the numerous online payment options is NEFT. 

What Is NEFT? 

NEFT is one of the many fund transfer options banks across India offer. The national electronic funds transfer (the full form of NEFT in banking) is an online money transfer mode that ensures safe and fast transactions between bank accounts. Online NEFT money transfers are quicker than regular offline means like challans, withdrawal/deposit forms, and cheques. You can transfer money from your savings account to another account within a day from your home rather than visiting the bank.  

How Does NEFT Work? 

Thanks to persistent regulations credited to the RBI, NEFT nowadays have a faster clearance cycle, and the service is available 24×7. Here is how NEFT works: 

Commencement of Transfer: 

People initiate fund transfers for a reason. Whether you are lending money to a loved one or paying a credit card bill, the NEFT transfer option can help. All you need to do is provide the necessary details, such as the beneficiary’s savings account number, the bank branch’s IFSC code, and the transfer amount. You can initiate an NEFT funds transfer through different channels, such as visiting the bank or using online banking modes (Internet and mobile banking). 

Adding the Beneficiary: 

Add the receiver’s details, such as the savings or current account number and the bank branch’s IFSC code. You don’t need to add the same beneficiary again the next time you initiate funds transfer online. This is a simple, one-time process. 

The Transaction is Processed: 

After you initiate the NEFT transaction, your bank will notify the details of the transaction to the NEFT clearing centre. The clearing centre is responsible for sorting and grouping the transactions from different banks. 

Settlement in the Group: 

Usually, the clearing centre settles NEFT transactions on hourly batches. It will process the NEFT transaction and then send the settlement file to the banks involved. 

Completion of Fund Transfer: 

The funds will be deposited into the beneficiary’s account once their bank receives the settlement files. The amount is usually deposited into the beneficiary bank account the same day or on the next working day. The time taken depends on the initiation time of the transaction. 

Confirmation of the Transaction: 

After the deposit, banks notify both the beneficiary and you about the transaction status. You can also track the status of the NEFT transaction through the net banking website or the banking app. This assures complete transparency from the bank. 

Also Read: UPI vs NEFT – What’s best for you? 

Why Opt for NEFT Transactions? 

Even if the bank will offer you quicker money transfer options, here’s why it might be prudent to choose the national electronic funds transfer option: 

Flexibility: 

The NEFT money transfer option is suitable for substantial transactions, particularly money transfers over ₹2 lakh. Unlike other fund transfer options, NEFT has fewer constraints for sizable transactions. The lack of a lower or upper limit makes NEFT an easily accessible money transfer option. 

Cost-efficient: 

NEFT outperforms numerous other electronic transfer options when it comes to cost. The NEFT money transfer option is economical for companies that spend a lot of money regularly. Banks levy an affordable fee of ₹2.50 on transactions up to ₹10,000. For transfers over ₹2 lakhs, the bank will charge you just ₹25.  

Speedy Processing: 

NEFT has evolved in terms of clearing time from approximately a day to hourly. This speeding up of the clearing time makes NEFT as fast as other payment options. This makes the NEFT a reliable payment option for paying your credit card bills. 

Is There a Limit on NEFT Transactions Per Day? 

The Reserve Bank of India (RBI) regulations do not impose any limit on NEFT transactions. However, that does not mean that there are no limits on transfers. Certain banks may have a cap on the number of NEFT money transfers in a day. 

What are the Charges For NEFT? 

By initiating a National Electronic Funds Transfer (the full form of NEFT in banking), you can be sure of prompt and safe money transfers. With Internet banking evolving continuously, NEFT has emerged as a seamless synthesis of contemporary virtual convenience and traditional banking systems. 

FAQs: 

What are the timings for NEFT transactions? 

Answer: You can start an NEFT transaction round-the-clock, and the beneficiary will receive the amount within 30 minutes. You can also opt to pay a small charge if you need instant transfer. 

Is NEFT available 24×7? 

Answer: The NEFT option is accessible 24×7 on all days yearly. This transaction is processed in batches every half an hour. 

What is the minimum and maximum amount for NEFT transactions? 

Answer: There is no maximum or minimum cap on the amount that can be transferred with the help of NEFT. 

How long does it take for a NEFT transfer to be completed?

Answer: Two hours is usually the standard time for the completion of an NEFT transfer. You can also track the status of the transfer easily. 

Can I initiate a NEFT transfer online? 

Answer: Yes. It is possible to start an NEFT transaction online. You can learn how to begin this transfer online with the help of a Google search. 

Are there any charges for NEFT transactions? 

Answer: There are charges on NEFT transfers, but they are minimal. 

Can I cancel an NEFT transaction? 

Answer: No, it is impossible to cancel an NEFT transfer. So, if you transfer money by mistake or submit the wrong IFSC code, notify the bank immediately. 

What information do I need to provide to initiate a NEFT transfer? 

Answer: Enter information like the beneficiary’s name, bank account number, and IFSC code of the branch for starting an NEFT transfer. 

Can I schedule NEFT transactions for future dates? 

Answer: Yes, it is possible to schedule the NEFT transfer for a future date through mobile or internet banking. Just specify the date and time for the transfer, and it will be done. 

Is NEFT available internationally? 

Answer: No, NEFT transfers are only allowed for transfers in India. It cannot be used for international transfers (except for Nepal, as it has a specific type of remittance facility). 

Are NEFT transactions secure? 

Answer: Yes, it is a secure way to transfer money. 

What is the difference between NEFT and RTGS? 

Answer: RTGS settles money transfers individually, while NEFT does the same in batches. 

Can I transfer funds from one bank account to another using NEFT? 

Answer: You can use NEFT to transfer funds from one bank account to another. 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.