NEFT Meaning in Banking

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Find out all about NEFT – the simplified domestic fund transfer process.

Key Takeaways

• Through NEFT, you can initiate domestic fund transfers at any time.
• You can conduct NEFT transactions online as well as offline.
• There is no transaction limit; however, banks may impose a limit.
• You can also pay your credit card bill, loans, EMI, etc., via NEFT.
• You do not have to pay any charges for online NEFT transactions.

Gone are the days when people had to spend at least half a day in long queues at banks, just to transfer money. Thanks to the development in banking technologies, we can now finish most of our banking requirements from the comfort of our homes. With technological advancement, it is also essential that you have a basic knowledge of internet banking. So today, we will discuss what is NEFT – one of the most used means of transferring money in India.

What is NEFT?

NEFT means National Electronic Funds Transfer. It is a mode of money transfer that enables one-to-one payments within India. NEFT is owned and operated by the Reserve Bank of India, and through this facility, you can transfer money from one account to another. You may initiate transfers between two bank accounts you own or from your account to others’ accounts in different banks. However, you can make this type of transaction only if your bank is NEFT-enabled.

Is There a Timing for NEFT Transactions?

Earlier, when RBI introduced NEFT, there were timeslots for clearance. However, the RBI changed the rules in December 2019, and you can now transfer money using NEFT 24/7, throughout the year and even on bank and public holidays.

Banks clear funds transferred through NEFT on a half-hour basis, which means the receiver will get the funds after half an hour from the time you initiate the transaction.

Is There a Limit on Fund Transfers?

RBI has not imposed any upper or lower limit for fund transfer through NEFT. However, banks could set their own upper limits on per day transactions. Hence, you should check with your bank about NEFT fund transfer limits.

Are There Any Charges for NEFT Transactions?

There are no charges for NEFT transactions done via internet banking or mobile banking apps. However, if you choose to conduct NEFT transactions at bank branches, your bank may levy a nominal charge based on the transfer amount. Here is the schedule of charges levied for online transactions

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Are There Provisions for International NEFT Transactions?

NEFT transactions are permitted only with Indian borders, with the rare exception of Nepal. If you have family, friends, or business associates in NEPAL, you can transfer money via NEFT. Nepalese beneficiaries can receive the fund transfer even if they do not have a bank account with a bank in Nepal.

Advantages of NEFT

Now that it is clear what NEFT means let us look at some of its advantages.

• You can transfer funds from any account of another account of any NEFT-enabled bank within India.
• This facility is available 24/7, throughout the year, including holidays.
• Money is transferred within half an hour in a secured manner.
• Confirmation of transaction is sent to the remitter by SMS and email.
• You do not have to pay any charges for online NEFT transactions.
• You do not need cheques or demand drafts for these transactions.
• You need not visit your bank branch to send money via NEFT.
• You can also pay your credit card bill, loans, EMIs, and utility bills via NEFT.

How to Initiate NEFT Transactions?

Use the steps below to transfer funds via NEFT.

1. Log in to your internet banking account on your laptop or mobile app.
2. Go to the ‘Fund Transfer’ tab and select ‘NEFT’.
3. Choose your beneficiary or add a new one by clicking on the ‘Add Beneficiary’ tab. Enter their details, such as their account number, bank name, branch and IFSC code, their name, and mobile number. Once you add a new beneficiary, you can initiate the transaction after another 30 minutes.
4. Confirm beneficiary details – name, account number, and mobile number (for SMS notifications).
5. Complete the transaction by entering the OTP sent on your Registered Mobile Number (RMN).

Your bank will send both you and your beneficiary an SMS confirming the transaction.

Conclusion

Now that we have discussed NEFT meaning, how it works, its advantages, and how to initiate NEFT transactions, you can use it anytime. It is a convenient, easy, quick online method of fund transfer that eliminates the need to visit a bank.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.