NEFT stands for National Electronic Funds Transfer.
Using an NEFT is sending a payment from one bank to another within the network.
NEFT payments are one-to-one payments that are transferred electronically using any account that’s set up in the NEFT network in India.
For many banks, these payments are set up via a mobile portal and can be done any time, any place.
How do NEFT payments work?
Users can transfer funds instantly 24 hours a day, 7 days a week, 365 days a year.
Originally, you could not do an NEFT except between 8:00am and 6:30pm, but that has since been redacted.
This level of convenience makes NEFT payments a great way to quickly get funds to someone without having to worry about physically withdrawing money or writing a check.
An NEFT payment can be transferred within just a few minutes if the transfer is being handled within the same bank.
Otherwise, if the transaction is between different banks, it could take up to 12 hours.
It is not a truly instant service but is quicker and more secure than methods such as check payments.
It is key to note that NEFT payments are done in batches every half hour rather than being a one-to-one transaction.
That is why there could be a delay in some payments.
However, if there are complications, they could further delay the fund's transfer.
How much can I transfer with NEFT?
When it comes to NEFT payments, there is no limit on what you can transfer.
It can be as little or as much as you would like.
There may, however, be limits set by your particular bank.
Some banks set the limit for one transaction at Rs. 50,000.
Each bank has its own fee schedule in regard to NEFT.
It usually follows the pattern that the more funds you are transferring, the higher the fee is.
How do I use NEFT payments?
While the NEFT process may seem complicated at first, it is a fairly simple process and is almost as easy on the back end as it is on the customer end.
The first step is that you will fill out a customer application and will include information needed for the beneficiary.
This includes things like a bank, IFSC, branch name, account number, name, and the amount that you want to send.
You will then authorize your bank to pull those funds from your account.
Your bank will then create a message and send that message into something called a pooling center where the batch is created.
Officially, this is called the NEFT Service Centre.
The NEFT Service Centre will then pass the message in the pooling center to the NEFT Clearing Centre which is run by the National Clearing Cell, Reserve Bank of India, Mumbai.
Their job is to include it in the next batch to be processed.
Again, the batches are processed about every half hour, 24 hours a day.
The Clearing Centre then organizes all of the transactions and creates accounting entries that will be sent to the respective banks, showing exactly what will be debited and what will be credited.
Then a remittance message will be sent back to the NEFT Service Centre into the pooling center.
The final step in the NEFT process is that the destination bank will receive the message and the funds will be transferred.
You will then receive confirmation that the transaction is complete via an email or SMS text message based on your account settings.
What is NEFT used for?
You can use this payment type for different financial reasons including some great personal ones.
Here are a few ways you can take advantage of NEFT:
- Credit card payments
- Loan payments
- Sending a monetary gift to a friend or family
- Paying someone for a service
You can check RBI’s website for the banks and branches that have NEFT available at them.
According to the Indo-Nepal Remittance Facility Scheme, the NEFT system allows for one-way transfers from India to Nepal.
Are there alternatives to NEFT?
There are other options to make instant payments, such as an RTGS (Real Time Gross Settlement) or UPI (Unified Payments Interface).
RTGS and UPI payments are immediate since you don’t have to wait for a batch to be created.
The details required for all of the payments are different, but the key difference is that NEFT payments are not as immediate as RTSG or UPI payments.
The fee schedules are also different from bank to bank for each payment type.
Working with your bank to look over fees and different transaction options, you can decide which is best for you.
NEFT payments have plenty of benefits for their users even though they are not the most instant option.
Some of these benefits are:
- You have a legal record of the transaction that can be accessed at anytime
- The transactions are easy and user friendly
- There is no need for either party to visit a bank
- You can initiate a payment any time and any place
- There is no need for physical paper money or checks
- There are no limits on how many NEFTs you can do in a day
With all of these incredible benefits, it’s no wonder that NEFT is becoming one of the most popular payment types in India.
As the world evolves, paper and physical money is becoming less and less attractive to people.
Using electronic payments like NEFT allows you to get money to whoever you owe without worrying about it getting lost in the mail or taking up your precious time.
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