FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
The NEFT revolution!
There used to be a time not very long ago, when sending money to another account in the same city or another city used to be a cumbersome process. It used to be like eternity before you could actually get the money to move. Today it’s a matter of a few minutes or at the max an hour and you can get the money transferred. The reason: NEFT
What is NEFT?
NEFT is an acronym for National Electronic Funds Transfer (NEFT). It is a nation-wide system, which helps individuals, firms and corporate to electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country.
Not all bank branches in the country are part of the NEFT funds transfer network, if a bank wants to be a part of the NEFT funds transfer network, a bank branch has to be NEFT-enabled. According to the data released by the RBI 74,680, branches or offices of 101 banks in the country out of around 82,400 bank branches are NEFT-enabled at end-January 2011.
Transfer money even without a bank account!
Individuals, firms or corporates having accounts with a bank branch can transfer funds using NEFT. It also offers assistance to the ones who do not have a bank account. They can deposit cash at the NEFT-enabled branch with instructions to transfer funds using NEFT. Such customers are given a separate transaction code in the NEFT system and they can transfer their funds to the beneficiaries. Such customers will have to furnish full details including their complete address, telephone number, etc. Thus NEFT helps its remitters to initiate funds transfer transactions even without the need for having a bank account.
Send to Nepal too!
It also helps in transfer of funds from India to Nepal. This is known as the Indo-Nepal Remittance Facility Scheme. According to this scheme a remitter can transfer funds from any of the NEFT-enabled branches in to Nepal, irrespective of whether the beneficiary in Nepal maintains an account with a bank branch in Nepal or not. The scheme also offers the beneficiary to receive the money in Nepalese Rupees.
The important feature of NEFT is that there is no limitation on the amount that can be transferred using NEFT, except, for the walk in customers who do not hold accounts as well as those remitting funds under the Indo-Nepal Remittance Facility Scheme; the maximum amount that could be transferred is Rs. 49,999.
How it works
NEFT works on hourly batches, there are eleven settlements from 9 am to 7 pm on week days and five settlements from 9 am to 1 pm on Saturdays.
The individual or firm who is willing to originate transfer of funds through NEFT has to fill an application form, which asks for the details such as name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number has to be given.
The originating bank branch will prepare a message and send it to NEFT Service Centre, which will then forward the message to the NEFT Clearing Centre operated by National Clearing Cell, Reserve Bank of India, Mumbai, to be included for the next available batch.
The Clearing Centre will then sort the funds transfer transactions destination wise, bank-wise and prepare accounting entries to receive funds from the originating banks and give the funds to the destination banks. The bank-wise remittance messages are then forwarded, to the destination banks through their pooling centre (NEFT Service Centre). The destination banks will receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary accounts.
As soon as these processes are over, the beneficiary will get the amount credited in his account for the first nine batches on weekdays and the first four batches on Saturdays on the same day. For transactions settled in the last two batches on week and the last batch on Saturdays, the beneficiaries will get the credit either on the same day or on the next working day morning.
Pay your card dues too!
The NEFT system can also be used to pay credit card dues to the card issuing banks. A separate Transaction Code (No. 52) has been allotted in the NEFT system in order to facilitate the payment of credit card dues to card issuing banks. The remitter has to quote the IFSC of the beneficiary card-issuing bank to initiate the bill payment transactions using NEFT.