A large majority of the individuals using online banking services would have come across the term NEFT. Yet, not many of them would be completely aware of NEFT full form. It is one of the easiest and most convenient ways of transferring funds. NEFT stands for National Electronic Funds Transfer. The payment mechanism runs nationwide and covers one to one fund transfers.
Definition of NEFT
NEFT is one of the methods by which one can transfer funds to another party within the country. NEFT allows any individual, organization, companies as well as corporates to transfer money electronically to another party having a bank account in India. NEFT payments take place in batches as opposed to some other mechanisms that clear transactions on an orderly basis. As requests get queued up, the batches are processed in an hourly manner to clear off the pending transactions. The Reserve Bank of India handles the NEFT payment gateway after initiating it in the year 2005. A substantial number of electronic transfers take place via NEFT, which also reflects the immense popularity of the mode.
Why do you need NEFT?
You can transfer funds to anyone in any part of the country within the matter of a few minutes. Unlike some other forms of transfer where sending a larger sum of money makes sense, you can use NEFT for transfer for much smaller transactions. Such is the convenience level, that these days you can see some small shopkeepers providing with an account number to regular customers for NEFT, rather than dealing in cash.
Once you are aware of NEFT full form, we need to get on to any pre-requisites required for the same. To be able to use NEFT mode of payment or transfer, one needs to have a savings or current bank account. In the event of you not having a bank account, you can still proceed with NEFT. You would need to visit a bank that is part of the NEFT network and proceed with the transfers. The only problem being, such remittance is almost always restricted at Rs. 50,000 per transaction. You would need to furnish the details of the receiver such as bank account number, IFSC code, contact details, etc.
Are there any chances of failures?
NEFT being a mode of fund transfer between two parties, there are chances of it failing. The usual suspects of NEFT failures are non-existent accounts or frozen accounts. No matter what the reason behind the failure is, the amount will be deposited back to the sender’s account within two hours of the failure. Should an event arise where you the receiver did not get the funds transferred, you can reach out to your bank as all of the transactions are recorded on the website as well as RBI.
What are the timings?
While figuring out NEFT full form, we briefly covered the fact that it operates in half-hourly windows. The RBI has made NEFT transactions available on a round-the-clock basis i.e. 24×7, 365 days. This change has been made to promote digital payments among users. Prior to this, the operating window for NEFT used to start from 8 AM to 7 PM.
There are 23 clearing batches in the meanwhile. So your transaction would get cleared as part of any of these 23 batches depending on the time of your fund transfer initiation. As per the new bank rules, Saturdays and Sundays are also working.
Are there any limits?
There are no limits on the amount that you can send via NEFT when it comes to direct account transfers. If you attempt to do so from a bank branch, the limit is set at Rs. 50,000 per transaction. The same limit is also valid if you want to send money to someone in Nepal. Transfers to Nepal are part of the Indo-Nepal Remittance Facility Scheme.
What are the NEFT charges?
For individuals who are at the receiving end of the transfer, there are no charges whatsoever. Moreover, no NEFT charges are applied on transactions initiated online via internet and /or mobile banking channels. However, if you are the one who is initiating the fund transfer, you would have to pay certain fees to facilitate the same.
- Maximum of Rs. 2.50 (+ GST) for transfers up to Rs. 10,000.
- Maximum of Rs. 5 (+ GST) for transfers above Rs. 10,000 and less than Rs. 1 Lakh.
- Maximum of Rs. 15 (+ GST) for transfers above Rs. 1 Lakh and less than Rs. 2 Lakh
- Maximum of Rs. 25 (+ GST) for transfers above Rs. 2 Lakh.
The charges for NEFT vary from bank to bank and you should check with your bank regarding the same. While some banks charge transfers up to Rs. 10,000 at flat Rs. 2.5, others charge Rs. 2.5 along with taxes. Depending on your account type, some banks might have free NEFT transfers within the same bank, adding much more convenience.
When you opt for an NEFT transfer to anyone, your bank deducts the amount from your account immediately. The same takes a few minutes to a few hours at the maximum to reach to the receiver’s bank account, subject to which clearing batch it is part of. The sending, as well as the receiving bank, needs to be a part of the nationwide NEFT network to be able to facilitate electronic fund transfers. You should also be aware of the bank account details and IFSC code of the bank branch of the receiver.