NEFT

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 nation­wide 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.

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 India 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.

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.

Pay Your Credit 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.

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