CATEGORY - SME

NEFT: Features, Advantages, How It Works & Initiating Transactions

SME - 15 Mar, 2024

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Sending Money Online: An Introduction to NEFT

India’s National Electronic Funds Transfer (NEFT) system offers a secure and convenient way to move funds between bank accounts. NEFT facilitates transfers for individuals, companies, and organizations, simplifying transactions like salary payments, bill settlements, and online purchases. Unlike real-time options, NEFT processes transactions in batches throughout the banking day, typically taking a few hours to complete. This ensures reliable fund movement. This introductory guide explores the features, advantages, and mechanics behind NEFT, empowering you to leverage this efficient payment system.

What is NEFT?

NEFT, or National Electronic Funds Transfer, is a secure and convenient way to transfer money electronically between bank accounts in India. Managed by the Reserve Bank of India (RBI), NEFT allows individuals and businesses to transfer funds 24/7 throughout the year. Transactions are settled in batches throughout the day, with funds typically credited to the recipient’s account within a few hours. NEFT offers a cost-effective alternative to traditional methods like cash or cheques.

Features and Advantages of NEFT

NEFT, or National Electronic Funds Transfer, is a convenient way to move money between bank accounts in India electronically. It’s useful for individuals, businesses, and organizations alike

Fast and Efficient: NEFT processes transfers in batches throughout the day, meaning your money usually arrives within the same business day.
Easy to Use: You can initiate NEFT transfers online, through mobile banking, or by visiting a bank branch. This flexibility allows you to choose the method that best suits your needs.
For Any Amount: No matter the size of your transfer, NEFT can handle it, making it suitable for small, everyday payments or more significant transactions.
Secure and Reliable: NEFT uses robust security measures to protect your money during transfer. For peace of mind, you’ll also receive confirmation after a successful transfer.
Cost-Effective: NEFT is a budget-friendly option for sending money compared to other methods. There are often no fees associated with NEFT transfers, although some banks may charge a minimal amount.
Nationwide Coverage: NEFT is widely accepted by banks across India, making it a reliable way to transfer funds.

With its speed, ease of use, security, and affordability, NEFT is a valuable tool for managing your finances in today’s digital world.

How Does NEFT Work?

NEFT, or National Electronic Funds Transfer, is a system in India that electronically moves money between bank accounts. Here’s a simplified breakdown:

Start the Transfer: You (the sender) provide details like the receiver’s account number, bank branch, and amount to be sent. You can do this through your bank’s website, mobile app, or in-person visit.
Adding the Receiver (One-Time Step): If it’s your first time sending money to this person, you’ll need to save their account details for easier transfers in the future.
Behind the Scenes: Once you initiate the transfer, your bank sends the information to a central NEFT hub. This hub groups transactions together for efficient processing.
Batched Settlements: NEFT transfers are settled in batches (like groups) throughout the day. The hub sends instructions to each bank involved in moving the money.
Money on the Move: Once your bank receives the instructions, they credit the money to the receiver’s account. This typically happens on the same day or the next business day, depending on when you initiated the transfer.
Confirmation for All: Both you and the receiver will get notifications from your banks confirming the successful transfer.

Important Notes:

NEFT transfers are only processed during bank working hours and have cut-off times for same-day transfers.
NEFT is a secure and reliable way to transfer money electronically in India.

How to Initiate an NEFT Transaction?

Are you transferring money digitally? NEFT (National Electronic Funds Transfer) lets you securely transfer funds between bank accounts in India. Here’s a simple guide to get you started:

Log in: Use your username and password to access your bank’s internet or mobile banking app.
Find Transfers: Locate the section for transfers or payments. It might be called “Transfers,” “Payments,” or something similar.
Choose NEFT: Select the option for NEFT transfers. This might be labeled “NEFT Transfer” or “Add Beneficiary for NEFT.”
Add Beneficiary: Fill in the details of the person you’re sending money to, including their account number, name, bank, and branch information. Double-check that everything is accurate to avoid any delays.
Initiate Transfer: Send an NEFT transfer to the beneficiary you just added.
Enter Details: Specify the amount you want to transfer and choose the account from which the funds will be withdrawn.
Review and Confirm: Carefully review all the transaction details to ensure everything is correct.
Verify with OTP: To confirm the transaction, use the One-Time Password (OTP) sent to your registered mobile number or Internet banking password.
Submit and Track: Once confirmed, submit the NEFT transaction. You’ll receive a confirmation message or reference number for tracking. Keep this information for your records.

Remember: NEFT transactions may take some time to process, typically within 24 hours.

Information Needed for NEFT Transfers

When transferring money using NEFT (National Electronic Funds Transfer), you’ll need Information about the person you’re sending it to (the beneficiary). Here’s a breakdown of what you’ll typically need:

Recipient’s Name: This is the full name of the person you’re sending the money to, precisely as it appears on their bank account.
Recipient’s Bank Name: The bank’s name where the recipient has their account.
Recipient’s Branch Name: The specific branch of the recipient’s bank.
Recipient’s Account Number: The unique number associated with the recipient’s bank account.
Recipient’s Account Type: This could be a savings, current, or other account type.
Recipient’s IFSC Code: The IFSC (Indian Financial System Code) is a unique 11-digit code that identifies the specific branch of the recipient’s bank. This code is essential to ensure the money goes to the intended recipient.

Additional Information (not always required):

Legal Entity Identifier (LEI): In some cases, you may also need to provide the Legal Entity Identifier (LEI) for yourself and the recipient. This is a unique code used to identify businesses and other organizations. However, LEI is typically only required for specific transactions.

NEFT Timings: 24/7 Convenience

You can initiate NEFT transfers anytime, 24 hours a day, seven days a week. The system operates continuously, processing transactions in batches throughout the day. In case of rare outages, the Reserve Bank of India will notify banks to ensure you’re informed.

NEFT: Limits and Fees

NEFT Transfer Limits:

There’s no overall limit on how much money you can send with NEFT. However, depending on their risk checks, each bank might have its limit. It’s best to contact your bank directly to determine their NEFT limit.

NEFT Transfer Fees:

The bank you use might charge fees for sending money with NEFT. Here’s a breakdown of the maximum fees they can charge:

Up to ₹10,000: The fee is ₹2.50 (plus any taxes) or less.
₹10,000 to ₹1 lakh: Fee is ₹5 (plus any taxes) or less.
₹1 lakh to ₹2 lakh: Fee is ₹15 (plus any taxes) or less.
Over ₹2 lakh: The fee is ₹25 (plus any taxes) or less.

FAQ’s

What is an NEFT Transfer?

NEFT (National Electronic Funds Transfer) is an RBI-operated system for secure and convenient 24/7 money transfers between bank accounts in India, with settlements in batches throughout the day.

What is NEFT payment?

NEFT stands for National Electronic Funds Transfer. It’s an India-based system for electronically transferring money between bank accounts.

What is a NEFT transaction?

An NEFT transaction is a single transfer of funds using the NEFT system.

How much time does NEFT take?

NEFT transfers are processed in batches throughout the day. They typically take a few hours to reflect in the receiver’s account.

What is the difference between NEFT and IMPS?

NEFT: Slower (batch processing)
IMPS: Faster (real-time)

NEFT transfer time?

NEFT transfers typically take a few hours as they are processed in batches.

NEFT transfer limit?

There’s no upper limit on NEFT transfers, but banks may have their restrictions.

Knowing NEFT sender details?

The receiver’s bank statement will show the sender’s name and account number but not all details.

Transferring money via NEFT?

You can initiate NEFT transfers through internet banking, mobile banking, or by visiting your bank branch. You’ll need the recipient’s bank account details.