NEFT, short for National Electronic Funds Transfer, is an electronic system designed for seamless money transfers. Governed by the Reserve Bank of India (RBI), NEFT enables the secure transfer of funds exclusively between NEFT-enabled bank accounts. As a reliable and efficient method of transferring money, NEFT ensures that your transactions are conducted smoothly and securely.
What is NEFT?
NEFT, which stands for National Electronic Funds Transfer, is an electronic payment system in India. It allows individuals and businesses to transfer funds from one bank account to another seamlessly and securely. NEFT is managed and regulated by the Reserve Bank of India (RBI), the country’s central banking institution. This system enables money transfers between NEFT-enabled bank accounts across different participating banks in India.
NEFT transactions are processed in batches at specific intervals throughout the day, ensuring efficient and timely transfer of funds. With NEFT, individuals and businesses can conveniently make payments, settle bills, transfer funds to family and friends, and conduct other financial transactions electronically.
Note: Starting from January 2020, the Reserve Bank of India (RBI) has instructed banks not to charge any additional fees for online transactions made through NEFT. This decision aims to promote digital transactions and provide users with a cost-effective and convenient method of transferring funds.
NEFT Transfer Timings
The NEFT system is available round the clock, every day of the year, allowing users to initiate transactions at any time. NEFT operates in regular intervals throughout the day, processing transactions in batches. In the rare event that NEFT is temporarily unavailable, the Reserve Bank of India (RBI) will notify all system participants accordingly.
How NEFT Transactions Work?
- Initiation: The sender provides the recipient’s bank account details and the amount to be transferred.
- Transaction Processing: The sender’s bank sends the transaction details to the NEFT system.
- Batching: The NEFT system collects and batches transactions throughout the day.
- Settlement and Clearing: The NEFT system processes the batches at predetermined intervals, settling and clearing the transactions between the banks involved.
- Crediting the Recipient’s Account: The recipient’s bank receives the transaction details and credits the funds to the recipient’s account.
- Confirmation: Both the sender and the recipient receive a confirmation message or alert from their respective banks about the successful completion of the NEFT transaction.
Also Read: How Much is the NEFT Settlement Time?
How to Perform NEFT Transaction?
Step 1: Log in to your internet banking account or visit your bank’s branch.
Step 2: Provide the necessary details:
- Recipient’s bank account number
- Recipient’s bank name and branch
- IFSC (Indian Financial System Code) of the recipient’s bank branch
- Amount to be transferred
- Purpose of the transaction (optional)
Step 3: Verify the entered details to ensure accuracy.
Step 4: Confirm any applicable charges or fees associated with the NEFT transaction.
Step 5: Authorize the NEFT transaction by providing your consent, either by entering an OTP (One-Time Password) or using any other authentication method provided by your bank.
Step 6: Once authorized, the NEFT transaction is initiated.
Step 7: After a certain interval, typically within a few hours, the funds will be transferred from your account to the recipient’s account.
Step 8: You will receive a confirmation message or alert from your bank regarding the successful completion of the NEFT transaction.
Step 9: Keep a record of the transaction details for future reference.
Important Factors to Consider for NEFT Transactions
When performing NEFT transactions, there are several conditions to consider. Here are some important points to keep in mind:
- Timings: NEFT transactions can be initiated 24×7, every day of the year. However, it is important to note that the actual processing of transactions occurs in specific batches throughout the day. The exact timings for these batches may vary from bank to bank, so it is advisable to check with your bank for the specific NEFT timings.
- Cut-off Times: Each bank will have a cut-off time for initiating NEFT transactions. Transactions initiated before the cut-off time will be processed on the same day, while those initiated after the cut-off time will be processed on the next working day.
- Minimum and Maximum Transaction Amount: Banks may impose minimum and maximum transaction limits for NEFT transfers. These limits can vary, so it is essential to check with your bank for the specific limits applicable to your account.
- Accuracy of Details: It is crucial to provide accurate and complete details of the recipient’s bank account number, bank name, branch, and the IFSC code. Any errors in these details can result in the transaction being delayed or rejected.
- RBI Notifications: In rare cases when NEFT services are temporarily unavailable, the Reserve Bank of India (RBI) will communicate this to all system participants through appropriate notifications. It is advisable to stay updated with such notifications to avoid any inconvenience.
Charges Applicable on NEFT Transactions
The originating bank has the option to charge its customers for outward transactions*, with the maximum charges outlined as follows:
- For transactions up to ₹10,000: The charge should not exceed ₹2.50 (+ Applicable GST).
- For transactions above ₹10,000 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).
*Outward transactions refer to financial transactions where funds are transferred from one account to another outside of an organization or entity. In other words, it involves transferring money from the account of the person or organization initiating the transaction to another recipient’s account, typically in a different bank or financial institution.
Disclaimer: This blog is written to make it easy for readers to understand complicated processes. Some information and screenshots may be outdated as government processes can change at times without notification. However, we try our best to keep our blogs updated and relevant.