Umesh Kurmi is a semi-qualified Chartered Accountant from the Institute of Chartered Accountants of Nepal with seven years of experience.
Table of Contents
- NEFT Full Form & Its Meaning in Banking
- Charges for NEFT
- Steps for NEFT transfer
- Advantages of NEFT system
- Advantages of NEFT system
- Indian Financial System Code (IFSC)
- What is the minimum/maximum amount for NEFT transactions under Corporate Internet Banking?
- What is the maximum/minimum limit of NEFT transactions under Retail Internet Banking?
NEFT Full Form & Its Meaning in Banking
NEFT stands for National Electronic Funds Transfer. The Reserve Bank of India owns and operates the NEFT system, which is a nationwide centralized payment system (RBI). It is a batch-based electronic transfer framework based on Deferred Net Settlement (DNS).
To participate in NEFT fund transfers, a bank branch must be NEFT-enabled. Typically requires one day for the transfer. The RBI's guidelines dictate that settlements and fund clearance take place in batches.
The RBI website contains the protocols that various stakeholders involved in the system must follow.
Charges for NEFT
Individual customers are not subject to any minimum or maximum limits. The amount of an NEFT transaction for walk-in customers who deposit cash cannot exceed Rs. 50,000. The charges for NEFT excluding GST are as follows:
|Slab||Charges through branch|
Up to Rs. 10,000
Above Rs. 10,000 and up to Rs. 100,000
Above Rs. 100,0000 and up to Rs. 200,000
Above Rs. 200,000
Steps for NEFT transfer
When you need to make an NEFT transfer, simply follow the instructions below:
Step 1: To begin, you must first log into your online banking account. You can apply for one on your bank's website if you don't have one currently.
Step 2: On the home page, look for 'Fund Transfer' and click it. A drop-down menu will appear. Select ‘NEFT’ from that menu.
Step 3: The person whom you are paying should be added as a beneficiary. If you haven't previously done so, you should add the person you're paying to the beneficiary list. For this, you have to click on ‘Add New Payee’ and enter the required details (Name, Account Number, Account Type, IFSC Code). Finally, click 'Add' or 'Confirm' to confirm your selection.
Step 4: For verification, OTP will be sent to your mobile number which you have provided to the bank. For authentication, you must input the OTP. After doing so, your action would be processed. Adding a beneficiary will take roughly 24 hours.
Step 5: After you link the beneficiary to your account, you will have to choose the beneficiary details from the various beneficiaries you have added. Then choose NEFT as a method of Fund Transfer.
Step 6: Make sure you provide the proper amount due and any optional remarks. And double-check your transaction.
Step 7: Click on ‘Confirm’ and the amount will be conveyed from your bank account to the other person’s bank account.
Advantages of NEFT system
NEFT offers the accompanying benefits for funds transfer:
- Nonstop accessibility on the entire day of the year
- Using NEFT for money transfers is cost-effective.
- There is no need to use a check or a demand draft (DD) for money transfers because NEFT is built on a secure platform.
- You don't need to go to the bank to transfer cash.
- Begin an online money transfer.
- The transfer can be completed more quickly and conveniently.
Operation of NEFT system
The flow of an NEFT transaction is shown in the steps below:
Step 1: An individual, firm, or corporation wishing to transfer funds via NEFT can use his or her bank's internet/mobile banking service to initiate an online funds transfer request. For the beneficiary to be added to the remitter's internet/mobile banking module, the remitter must provide information such as the beneficiary's name, branch name where the beneficiary has an account, the IFSC of that branch, account type, and account number, and so on. After adding a beneficiary, the remitter can start an online NEFT funds transfer by authorizing a debit from his or her account.
Alternatively, the remitter can initiate NEFT funds transfer through branch/off-line mode by visiting his or her bank branch. The customer must fill out the beneficiary information on the NEFT application form, which is available at the bank branch, and authorize the branch to debit his or her account for the amount specified on the NEFT application form.
Step 2: The sending bank creates a message and sends it to its pooling center, also known as the NEFT Service Centre.
Step 3: The pooling center sends the message to the RBI's NEFT Clearing Centre, which includes it in the next available batch.
Step 4: The Clearing Centre sorts beneficiary bank-by-beneficiary bank funds transfer transactions and creates accounting entries to receive funds from originating banks (debit) and distribute funds to beneficiary banks (credit). Following that, bank-by-bank remittance messages are forwarded to the beneficiary banks via their pooling center (NEFT Service Centre).
Step 5: Beneficiary banks receive inward remittance messages from the Clearing Centre and credit the beneficiary customers' accounts.
Indian Financial System Code (IFSC)
The IFSC is an alpha-numeric code that particularly recognizes an NEFT-empowered bank branch. It's an 11-digit code with the first four alpha characters denoting the bank and the last six alpha characters denoting the branch. Zero is the fifth character. The NEFT system uses the IFSC to identify the originating and destination banks/branches, as well as to route messages to the appropriate banks/ branches.
The list of participating bank branches in NEFT, as well as their IFSCs, is also available on the RBI website.
The IFSC of the branch should be imprinted on all checks given to clients, as instructed by RBI.
What is the minimum/maximum amount for NEFT transactions under Corporate Internet Banking?
|Type||Minimum||Maximum (per transaction)|
Saral - Rs.25 Lakhs, Vyapaar - Rs.50 Lakhs, Vistaar - Rs.2000 Crores
What is the maximum/minimum limit of NEFT transactions under Retail Internet Banking?
Rs. 10 Lakhs
So now you know what NEFT stands for National Electronic Fund Transfer and how to use it to send money quickly. The maximum NEFT limit is different for each bank, as are the NEFT fees. So, before you send an NEFT, double-check that you have all of the beneficiary's account information.
What is the NEFT payment method?
It's a type of money transfer that allows you to make one-to-one payments within India. The Reserve Bank of India owns and operates the NEFT system, which allows you to transfer money from one account to another.
How long does it take to send cash using NEFT?
Cash would be credited within two business working hours.
How would it be a good idea for me to respond assuming funds are credited through NEFT however my record is charged?
Trust that the funds will be attributed back to your record in 24 hours.
What is the difference between NEFT and RTGS?
National Electronic Funds Transfer is abbreviated as NEFT, while Real-Time Gross Settlement is abbreviated as RTGS. NEFT is a payment system that allows funds to be settled in half-hourly batches. RTGS is a payment system that allows for continuous and real-time fund transfer settlement.
Are UPI and NEFT the same?
UPI allows for free, real-time transfers (currently). There is, however, a daily transfer limit of Rs. 1 lakh. NEFT, on the other hand, enables the electronic transfer of funds from any bank branch in the country to any individual holding an account at another bank branch.
Can I do NEFT after 8 pm?
Previously, NEFT transactions were only processed between the hours of 8:00 a.m. and 6:30 p.m. Monday to Friday and 8:00 a.m. to 12:00 p.m. on Saturdays. However, beginning from 2020, NEFT transactions are available 24 hours a day, seven days a week.
How do I know who sent money through NEFT?
For this, check your SMSs or emails. You will receive an SMS or an email as soon as the funds have been credited to the recipient's bank account.
How can I check my NEFT status?
To check NEFT status, check your SMSs or emails. You will receive an SMS or an email as soon as the funds have been credited to the recipient's bank account.
How do I know if NEFT is successful?
You will receive an immediate SMS notification that the beneficiary account has been credited after it has been credited. This is how you'll know if the NEFT transaction was successful.
Which is safe IMPS or NEFT?
IMPS is the way to go if you need to transmit money quickly and don't want to deal with the trouble of registering a beneficiary. However, NEFT is the better option if you need to send a large sum of money.
Which is faster RTGS or NEFT?
The fastest method of payment is determined by the urgency and size of your transaction. RTGS is a faster and more efficient mode of payment if your transaction exceeds Rs. 2 lakh. For smaller payments, however, NEFT is a more efficient means of payment.
Which is cheaper RTGS or NEFT?
For large sums of money, RTGS is better. For small amounts where there is not much urgency, NEFT is better. RTGS transactions are usually more expensive than NEFT transactions.
What is the RTGS limit?
The Real-Time Gross Settlement (RTGS) technology is designed for high-volume transactions. The everyday least sum that can be sent through RTGS is Rs. 2 lakh. The maximum amount per day is ten lakh rupees.
Is Google pay using NEFT?
Banks are no longer required for NEFT, IMPS, and RTGS; Google Pay, PhonePe, and other fintech companies can now handle these transactions. Fintech companies can now process RTGS and NEFT transactions, thanks to several measures announced by the RBI for digital payments.
Can NEFT be done on Paytm?
Paytm Payments Bank, for example, allows users to send up to Rs. 10 lakh per transaction via NEFT.
Who is the NEFT beneficiary?
The individual to whom the payment is to be made must be added as a 'beneficiary,' and his bank account details must be provided to transfer payments. These details include the beneficiary account holder's name, account number, bank and branch names, and the beneficiary bank branch's IFSC code.
Is NEFT possible without a cheque?
Banks may provide a temporary checkbook in your name if you do not have a checkbook with you when requesting a fund transfer through the NEFT or RTGS facility.
Can I transfer money through NEFT from a non-home branch?
Using the NEFT system, anyone can send money electronically from one bank branch to another that participates in the payment system. The NEFT system does not allow for real-time fund transfers, and the funds are transferred in half-hourly batches.
When an NEFT Fails?
• If the account does not exist.
• When a wrong IFSC Code is entered.
• When the beneficiary's account is frozen.
In any case, the sum will be kept back to the sender's account in 2 hours if the NEFT transfer has fizzled.
Can NEFT be used for international transfer?
Indeed, cash can be moved from and to NRE and NRO accounts in the country through NEFT. However, compliance with the regulations of the Foreign Exchange Management Act of 2000 (FEMA) and the Wire Transfer Guidelines is required.
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This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2022 Umesh Kurmi