National Electronic Funds Transfer (NEFT) is one of the most common electronic fund transfer platform that allows people to transfer money from any bank account to another. This payment system that is accepted nationwide is well known because it allows quick one-to-one funds transfer. Under the NEFT scheme, people may simply electronically transfer money from one bank branch to another person with an account in any other bank branch across the country that is under the NEFT Scheme. Also note the bank does require an IFSC code to complete the transaction. Some banks even offer the NEFT transfer through their ATMs.
An IFSC code is simply a alphanumeric code made up of 11 characters which is unique and assigned to a specific branch for any bank that functions under the NEFT network in India. While we get to understand more details about a NEFT online transfer it is essential to know that transferring money from a bank branch to another through accounts is possible. Please note that the bank branch should be a part of the NEFT network along with RTGS services. It is important to know that an IFSC code can be broken down into 3 specific parts: The first part is the bank name, continued by the number “0” and then the unique branch code assigned by NEFT. It looks like this, ‘XYZ00000123’.
How to Use NEFT to Transfer Money?
This is a generic process of a NEFT transfer, however minute details may vary, based on the banks sending and receiving the fund transfer:
- You need to first fills up an online application form on the bank website, where you add the details of the person you are sending the money to a.k.a. Beneficiary. This will include details such as name, the name of his or her bank, their branch name, IFSC code of their bank, the type of account and finally the account number along with the amount you wish to send. The remitter authorizes his/her bank branch to debit his account and remit the specified amount to the beneficiary. This facility is also available through online banking and some banks offer the NEFT facility even through the ATMs.
- Your bank will then issue a message and will then send it to their NEFT Service Centre.
- NEFT forwards this message from your bank to the NEFT Clearing Centre which is operated by National Clearing Cell which is a part of the Reserve Bank of India in Mumbai and hence include the transaction in the next available branch of transaction.
- The NEFT Clearing Centre then sorts all the funds transfer transactions based on banks and accounts the entries for fund transfer from your bank which will be debited and gives the funds to the recipient's banks. The NEFT Service Center then receives the messages and entries along with the messages from the NEFT Clearing Centre and passes on the funds to the receiver's account.
Fees and Charges for NEFT Services:
The recipient bank does not charge anything to the recipient account for a NEFT transaction.
For the sender, the sending bank charges the following based on the amount being transferred as follows:
- Amount upto Rs.10,000: Rs.2.50 + Service Tax applicable
- Amount between Rs.10,000 to Rs.1 lakh: Rs.5 + Service Tax applicable
- Amount between Rs.1 lakh and Rs.2 lakhs: Rs.15 + Service Tax applicable
- Amount over Rs.2 lakhs : Rs.25 + Service Tax applicable
Timings for NEFT Transactions:
At the moment NEFT functions in hourly batches hence between the service centers operational hours (8:00 AM to 7:00 PM on any given week day along with 8 am to 1 pm on Saturdays there are 8 and 6 batches that operate, respectively.
Hence money can be transferred from Monday to Saturdays (Except the 2nd and 4th Saturday of the month) from 8:00 AM to 6:30 PM. Also, NEFT transactions do not get credited on public and bank holidays.
But, the sender can queue in the transaction for the recipient and wait, when NEFT picks it up their next working hour and day.
Public Holidays when NEFT Transactions are not completed include Republic Day, Good Friday, Annual Closing of Banks, RBI's Annual Closing of Accounts, Ramzan Id (Id-ul-Fitr)/Ratha Yatra, Independence Day, Dasara / Vijaya Dashami and Muharram.
How NEFT is Different from RTGS?
This was said to be the quickest way to transfer money online until UPI came into the picture. The amount for transfer must be more than Rs. 2 lakhs. This is one of the most safe and secure channels for money transfer in the country. Though it is slightly different from NEFT, this form of transaction also requires knowing the the IFSC code of the sender as well as the recipient. The requests are processed instantly post receipt but only in particular banking hours as mentioned by Samarth Sahakari Bank. There are no maximum amount limits for RTGS service .
News About National Electronic Funds Transfer (NEFT)
RBI reduces the clearance time for NEFTIn a bid to make the digital transactions more efficient, the Reserve Bank of India has taken the initiative to cut down the time involved in National Electronic Funds Transfer (NEFT) transactions. Currently, NEFT transactions are carried out on an hourly basis, RBI plans to reduce it to half-hourly basis. This initiative will make electronic payments more efficient while offering convenience to the customer. By making NEFT faster, it is expected to see a rise in the number of people using NEFT over other modes of transactions. With NEFT settlement cycle reducing from hourly batches to half-hourly batches, the government is a step closer to making India a cashless economy. The government has also offered various other platforms for carrying out payments and transactions since demonetization of scrapped Rs.1,000 and Rs.500 notes. The digital wallets, UPI apps, Aadhaar-Enabled Payment System, and other initiatives are already in progress to offer superior electronic payment services.
7th April 2017