What is the full form of NEFT?

What is NEFT?

NEFT stands for National Funds Transfer System. It is a centralized payment system and can be used all over India. The owner of NEFT is the Reserve Bank of India (RBI). NEFT is one of the fastest ways to transfer money between banks all over India. The bank branch must have to be enabled to have an NEFT transfer. NEFT can be used for online shopping, salary payment, bill payment, etc.

How does NEFT Work?

• Here are the steps that have to be followed while sending money through NEFT.

• If you want to send money online, you have to fill out the NEFT form. You have to provide the bank details of the recipient which will include

  • Recipient name

  • Bank branch

  • IFSC

  • Account type

  • Account number

  • Legal entity identifier for sender and recipient

• All these details add the recipient to the mobile or internet banking. In order to start the fund transfer, you have to give your authorization to debit the required amount from your account. You can also send the money offline by filling out the form after reaching your bank. You have to fill in the bank details of the recipient and authorize the bank to start the transfer process.

• The sender's bank sends a message to the NEFT service center.

• The NEFT service center sends the same message to the NEFT clearing center.

• The clearing center checks the recipient's details and then accounting entries are prepared so that funds can be transferred to the recipient's account. The sender receives the debit and the recipient receives the credit message.

IFSC

IFSC stands for Indian System Financial Code. It is an alphanumeric code which has to be provided when you go for NEFT. This code consists of 11 characters out of which the first four characters are alphabets which is the name of the bank. The fifth character is zero which has been reserved for future use. The remaining 6 characters are the bank branch. IFSC code of a bank branch can be easily found on the RBI website. The website of each bank branch is also available which you can visit to know about the IFSC. You can also find the code on the chequebook and passbook.

Limit of the Amount to be Transferred

RBI has not imposed any limit on transferring money. The member bank can limit the amount depending on the risk that it can bear. Its board has the authority of limiting the amount to be transferred through NEFT.

Availability of NEFT

NEFT is available 24 x 7 x 365 and you can send money online. For offline money transfers, NEFT is available till the time the bank is opened

Fee for NEFT

No charges have to be paid if the money is being transferred from one branch to another branch of the same bank. Processing charges for outward transactions through NEFT has also been stopped by RBI in 2019. There are no charges for online money transfers through NEFT. There are a few outward transactions for which the sender bank may take the fee as follows −

• To transfer ₹10,000, you have to pay ₹2.50 along with GST

• To transfer money above ₹10,000 up to ₹100,000, you have to pay ₹5 with GST

• To Transfer money more than ₹100,000 up to ₹200,000, you have to pay RS 15 with GST

• To transfer money more than ₹200,000, you have to pay ₹25 with GST

Fees charged by different banks can be found in the table below −

Banks	Maximum NEFT Charges
State Bank of India	₹25+ GST
ICICI Bank	₹24.75 + Applicable GST
HDFC Bank	₹10 + Applicable GST
Canara Bank	₹24.75 + GST
Indian Overseas Bank	₹ 19
IndusInd Bank	₹50 + GST
IDFC Bank	NIL
IDBI Bank	₹ 25
Axis Bank	NIL
Union Bank of India	₹25 + Taxes

Steps to transfer money online through NEFT

Here are the steps that you have to follow to transfer money using NEFT.

• Navigate to your bank’s website and enter the credentials to login

• Choose NEFT in the Fund Transfer option

• Choose the recipient to whom you want to transfer the funds

• Add more recipients if you want to do so by clicking Add Beneficiary

• Enter the details of the recipient which will include the recipient's name, bank branch account type, account number, and IFSC

• Verify the details before confirming as the money can be transferred to the wrong account

• After confirming, you will receive a four-digit OTP for confirmation of the recipient's addition

• The recipient will be added to for fund transfer

• Now choose the recipient and select the bank account from which you want to transfer money

• Click the Confirm button to start the transaction

Difference between RTGS and NEFT

Difference between NEFT and RTGS can be found in the table below −

NEFT	RTGS
Any amount of funds can be transferred	Large amounts of funds can be transferred
No minimum transfer limit	A minimum of at least ₹2 should be transferred
Money transfer can take at least half an hour to 2 hours	Money is transferred instantly
When a transaction fails, the sending bank receives the refund within 2 hours	When a transaction fails, the sending bank receives the refund within 1 hour
Transactions are settled in batches at specific times	Transactions are settled on a one-to-one basis
No charges for online transactions but offline transactions are charged	No charges are levied on customers

Difference between IMPS and NEFT

The differences between NEFT and IMPS are as follows −

NEFT	IMPS
Managed by RBI (Reserve Bank of India)	Managed by NPCI (National Payments Corporation of India)
Money is transferred in batches	Money is transferred instantly
NEFT has no charges if done online but for offline charges, a small fee has to be paid	IMPS is a paid service

Advantages of NEFT

NEFT has many advantages and some of them are listed below −

• NEFT is always available so money transfer is easy and can be done anytime

• No transaction charges if used online and minimum charges for offline usage

• Transfer of funds is secure

• The service is available all over India

Disadvantages of NEFT

• NEFT has a few disadvantages listed below:

• Instant fund transfer cannot be done

• Additional fee is charged by some banks

• Only domestic transfers can be done

• Not accessible to everyone

Conclusion

NEFT is a system which can be used to transfer money from one bank account to another. You can transfer money online and offline. Online transfer through NEFT is available for 24x7x365. Transferring money can be a tedious task for new people but experienced people find it easy. There are no charges for online money transfers but a minimum charge is taken for offline transactions

FAQs

FAQ 1: Who Can use the NEFT system to transfer funds

Ans: The NEFT system can be used by companies, individuals, and corporates to send money. They need to have an account in a branch which is enabled with NEFT.

FAQ 2: Can I send money even if I do not have an account in the member branch

Ans: Yes! You can send money even if you do not have a bank account in the member bank. In such a case, the recipient must have a bank account in the branch that supports NEFT. You can deposit the required money in the branch from where you want to send the money. After that, you have to fill out the form which will include the bank details of the recipient. The money will be transferred to the recipient's account. You cannot transfer more than ₹50,000 in such a case.

FAQ 3: Can I send money to the recipient in another country?

Ans: Currently, you can send the money only to the recipients residing in Nepal with the help of INRF (Indo-Nepal Remittance Facility)

FAQ 4: Can money be transferred between NRE (Non-Resident (External) Account) to NRO (Non-Resident Ordinary Rupee Account) using NEFT?

Ans: Yes! You can use NEFT to transfer many between NRE and NRO. This transfer depends on the Foreign Exchange Management Act 2000.

FAQ 5: How much time does it take for the recipient to receive the money?

Ans: It takes a maximum of 2 hours for the recipient to receive the money.

FAQ 6: What will happen if the recipient does not receive the money?

Ans: In such a case, your money will be refunded to your account.