NEFT

NEFT: What Does It Mean in Banking Terms?

The NEFT Full Form in banking is a ‘National Electronic Funds Transfer’, which refers to an electronic money transfer system. The Reserve Bank of India introduced the NEFT, in which transactions can happen only between participating banks. There are no restrictions for NEFT transactions; you can use this secure mode to transfer money within a few minutes. In addition, there is no time limitation to using this mode to send cash.

Details Required for NEFT

You must add beneficiary and then use the following for transferring money using NEFT.

Account holder’s name to whom you send funds
Branch name of the bank
Account number
Bank name
IFSC code of the bank branch
Details of amount

After adding a beneficiary, you must wait a few minutes or hours for the activation. Afterwards, you can start with transactions.

The NEFT Process

Here is the description of the step-by-step process.

Add a beneficiary.
After beneficiary addition, the bank activates the beneficiary in a few minutes/hours.
After the activation, you can initiate a fund transfer.
Your bank then creates a message and sends it to its NEFT service centre after the transaction.
The NEFT service centre sends the message to the RBI-run NEFT clearance centre.
To deduct funds from the sender and credit them to the recipient’s account, the clearing centre arranges payment processing requests made by the recipient bank.
The clearing centre sends a payment message to the recipient banks through their NEFT service centre.
Finally, the recipient bank receives the inbound transfer notifications from the clearing centre and credits the funds to the beneficiary’s accounts.

Eligibility for NEFT

Any individual, corporation or firm having a current or savings account is eligible to transfer money through NEFT. This approach may transfer funds from one account to another within the same bank and between accounts from other banks.

However, you must enter the required details correctly to complete a transaction successfully.

Benefits and Features of NEFT

NEFT benefits you in the following ways:

NEFT is the fastest and most secure method to transfer money.
You can send money from one account to another within the same bank and between accounts from other banks.
This method is available 24*7 and 365 days.
Your beneficiary’s account will have the deposited amount within a few minutes.
You can save your effort and time on bank transactions by instantly making a transaction by logging into your net banking account.
NEFT is a paperless facility.

FAQs on NEFT

What is the difference between RTGS & NEFT?

RTGS is a payment system for continuous and real-time settlement of funds transfers. Therefore, you can prefer RTGS for urgent transfers of large amounts. On the other hand, you must choose NEFT for transfers that are not time-sensitive.

What is the limit for NEFT transfer?

There is no minimum limit on the money you can transfer using the NEFT system. However, you can set a maximum limit called the ‘NEFT Limit' on the amount you can transfer from your bank side, as the RBI doesn’t pose any such limit.

How many NEFT transactions occur in 24 hours?

All the NEFT settlement requests are settled in batches once in half hour. So in 24 hours of a day, two sets of NEFT transactions occur every hour.

What are the disadvantages of NEFT?

The only disadvantage of NEFT is that it is highly technical. You may not find it easy to transfer funds if you have little computer knowledge.

What do you mean by NEFT transfer?

NEFT is an electronic mode used to transfer money, where you can perform transactions by logging into your net banking account. However, you must add the person or corporation as a beneficiary to use this mode.

What is the full form of NEFT?

The NEFT's full form is National Electronic Funds Transfer.

What are the benefits of NEFT?

NEFT is one of the most secure and fastest electronic payment transfer methods. It is a well-organised service that processes payments in batches. Moreover, it is a paperless service which is available online.