What is NEFT - Work Process, Sending and Receiving Money, Limit, Benefits, What is IFSC.

National Electronic Fund Transfer (NEFT) 

What is NEFT -

National Electronic Fund Transfer (NEFT) is one of the most prominent electronic funds transfer system of India. Started in Nov - 2005, NEFT is a facility provided to bank customers to enable them to transfer funds easily and securely on a one-to-one basis. It is done via electronic messages.

This is not real-time basis like RTGS (Real Time Gross Settlement). This is a "net" transfer facility which is executed in hourly batches resulting in a time lag. 

NEFT facilities are available in 30,000 bank branches all over the country and work on a batch mode.

How NEFT works -

Are all bank branches in the country part of the NEFT funds transfer network? -  

For being part of the NEFT funds transfer network, a bank branch has to be NEFT - enabled. The list of bank-wise branches which are participating in NEFT  is provided in the website of Reserve Bank of India at   

http://www.rbi.org.in/script/neft.aspx

Who can transfer funds using NEFT -

Individuals, firms or corporate maintaining accounts with a bank branch can transfer funds using NEFT. 

Even such individuals who do not have a bank account (walk-in customers)  can also deposite cash at NEFT - enabled branches with instructions to transfer funds using NEFT.

However, such cash remittance will be restricted to a maximum of 50,000/- per transaction. Such customers have to furnish full details including complete address, telephone number, etc.

NEFT, thus, facilitates originators or remitters to initiate funds transfer transactions even without having a bank account.

Who can receive funds through the NEFT system? -

Individuals, firms or corporate maintaining accounts with a bank branch can receive funds through the NEFT system.

It is, therefore, necessary for the beneficiary to have an account with the NEFT enabled destination bank branch in the country.

The NEFT system also facilitates one-way cross-border transfer of funds from India to Nepal. This is known as the Indo-Nepal Remittance Facility Scheme.

A remitter can transfer funds from any of the NEFT-enabled branches in India to Nepal, irrespective of whether the beneficiary in Nepal maintains an account with a bank branch in Nepal or not. 

The beneficiary would receive funds in Nepalese Rupees.

Is there any limit on the amount that could be transferred using NEFT? -

There is no limit - either minimum or maximum - on the amount of funds that could be transferred using NEFT. However, maximum amount per transaction is limited to 50,000/ -  for cash-based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme.

What is the operating hours of NEFT? - 

AS per RBI guidelines, National Electronic Funds Transfer (NEFT) is available 24✖7 with effect from Dec 16, 2019. From July 10, 2017 settlements of fund transfer requests in NEFT system is done on half-hourly basis.

What are the benefits of using NEFT? - 

NEFT offers many advantages over the other modes of funds transfer:

• The remitter need not send the physical cheque or Demand Draft to the beneficiary.

• The beneficiary need not be apprehensive of loss/theft of physical instruments or the likelihood of fraudulent encashment there of.

• Cost effective.

• Credit confirmation of the remittances sent by SMS or email. 

• Remitter can initiate the remittance from his home/ place of work using internet banking also. 

• Near real time transfer of the funds to the beneficiary account in a secure manner.

What is IFSC? -

IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating the NEFT system.

This is an 11 digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch.The 5th character is 0 (zero). 

IFSC is used by the NEFT system to identify the originating/destination banks/branches and also to route the message appropriately to the concerned banks/branches.