National Electronic Funds Transfer


National Electronic Funds Transfer is an electronic funds transfer system maintained by the Reserve Bank of India. Started in November 2005, the setup was established and maintained by Institute for Development and Research in Banking Technology. NEFT enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a one-to-one basis. It is done via electronic messages.
Unlike real-time gross settlement, fund transfers through the NEFT system do not occur in real-time basis. NEFT settles fund transfers in hourly batches with 23 settlements occurring between 00:30 hrs. to 00:00 hrs.
From December 16, 2019, there would be 48 half-hourly batches occurring between 00.30 am to 00:00 am every day regardless of a holiday or otherwise,
As of November 30, 2019, NEFT facilities were available at 1,48,477 branches/offices of 216 banks across the country and online through the website of NEFT-enabled banks. NEFT has gained popularity due to the ease and efficiency with which the transactions can be concluded.
There is no limit – either minimum or maximum – on the amount of funds that can be transferred using NEFT.

Process

Detailed process of NEFT is as follows:
  1. The customer fills an application form providing details of the beneficiary and the amount to be remitted. The remitter authorizes his/her bank branch to debit his account and remit the specified amount to the beneficiary. This facility is also available through online banking, and some banks also offer the NEFT facility through ATMs.
  2. The originating bank branch prepares a message and sends the message to its pooling centre.
  3. The pooling centre forwards the message to the NEFT Clearing Centre to be included for the next available batch.
  4. The Clearing Centre sorts the funds transfer transactions destination bank-wise and prepares accounting entries to receive funds from the originating banks and give the funds to the destination banks. Thereafter, bank-wise remittance messages are forwarded to the destination banks through their pooling centre.
  5. The destination banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.

    Settlement timings

NEFT transfers are settled in half-hourly batches every day between 00:30 am and 00:00 am all through the year.
NEFT originally settled fund transfers in hourly batches. The RBI reduced clearance times to half-hourly batches in April 2016. In August 2019, the RBI announced that it would enable round-the-clock settlements from 16 December 2019.

Service charges for NEFT transactions

The structure of charges is as follows:
Inward transactions at destination bank branches :
Outward transactions at originating bank branches :
216.71 million National Electronic Funds Transfers transactions worth were made in September 2019, as against 661 million transactions worth the entire year 2013-15.