What is NEFT - National Emergency Funds Transfer

National Electronic Funds Transfer (NEFT) is an Indian system of electronic transfer of money from one bank or bank branch to another.

The banks or their branches that support such transactions have to participate in the NEFT network. An updated list of banks and branches that are NEFT-enabled can be found on the Reserve Bank of India (RBI) website.

The full form of NEFT is "National Electronic Funds Transfer (NEFT)". The NEFT is a nation wide payment system facilitating one-to-one funds transfer. Under this system, individuals, firms, and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the system.

NEFT Timings

To make it more customer friendly, RBI announced that from 10th July 2017, the settlement will be on half hourly basis.

As announced in the First Bi-monthly Monetary Policy Statement for 2017-18, additional settlements in the NEFT system at half-hour intervals are being introduced to enhance the efficiency of the system and add to customer convenience. The half hourly settlements would speed up the

The half hourly settlements would speed up the fund’s transfer process and provide faster credit to the destination accounts.

The transfer of money from the customer remitting it to the beneficiary account usually takes place on the same day. Settlement or clearance of funds takes place in batches as specified by the guidelines by the RBI. Any amount of money can be transferred using NEFT, making it usually the best method for retail remittances. Customers with Internet banking accounts can use the NEFT facility to transfer funds nationwide on their own. Funds can also be transferred via NEFT by customers by walking into any bank branch (which is NEFT-enabled) and leaving relevant instructions for such transfer - either from their bank accounts or by payment of cash. Transfer of funds to Nepal using NEFT, is also allowed subject to limits.

What are the charges applicable for NEFT?

According to RBI, banks cannot levy any charge for inward remittances or on receipt of funds. However, it has capped the charges on outward transfers through NEFT and RTGS. For transfers through the former, you need to pay around Rs 5-25, depending on the amount. Banks cannot charge more than Rs 5 for any transfer up to Rs 1 lakh, Rs 15 for Rs 1-2 lakh and Rs 25 for those above Rs 2 lakh. Under RTGS, you have to pay Rs 25 for Rs 2-5 lakh and Rs 50 for anything above Rs 5 lakh.

In order to make a remittance via NEFT, the customer initiating the transfer needs to have the IFSC (Indian Financial System Code) of the bank branch where the beneficiary account is located. IFSC is an alphanumeric 11-digit code that functions as a unique address for a particular branch. Customers will also need to input the beneficiary account number and name as well as the name of the bank being transferred to.

NEFT operates on a deferred net settlement (DNS) basis and settles transactions in batches. The settlement takes place with all transactions received till a particular cut-off time. It operates in hourly batches — there are 11 settlements from 9 am to 7 pm on weekdays and five between 9 am and 1 pm on Saturdays. Any transaction initiated after the designated time would have to wait till the next settlement time.

What if the amount does not get credited? 

If the transaction fails, the beneficiary’s bank must return the amount to your bank within two hours and the transaction must be reversed. Also, the bank must transfer the amount to your account within 30 minutes of receiving the same. The process can work quickly for RTGS . But, in case of NEFT the entire process could take an additional three-four hours