NEFT: National Electronic Funds Transfer

We all are aware of the importance of banking in our daily lives. With time, banking has gone online, which resulted in an easier way despite any heavy burden. In the recent world, we don't have to visit the bank and spend the majority of our time standing in a queue waiting for our turn to come for the money transfer. Now we don't have to fill cheques and money withdrawal receipts or penalties at the present period of time. NEFT is one of the networked procedures of transferring money which made our money proceedings more convenient.

The success of the bank processes is broadly depends on the evolution in the area of information technology and communications. The computerized method of money transfer is a safe, secure, and convenient manner to transfer funds. It only takes a few minutes to deduct money from one bank account and credit it into another bank account, leading to such a time saver process with minimal effort. Basically, two systems are introduced in India for electronic money transfer: NEFT and RTGS. These both are directed by the Reserve bank of India.

What is NEFT?

National Electronic Funds Transfer (NEFT) is an online process used for transferring funds. Money can be transferred from one bank account in one bank to another bank account in another bank. NEFT was initiated by the Reserve bank of India (RBI). A bank branch has to be NEFT- enabled for a consumer so that they can easily transfer money to another party.

• In 2005, NEFT was introduced and made compulsory for each and every branch of the bank on Special Economic Fund Transfer system (SEFT).
• NEFT process performs on Deferred Net Settlements.
• The proceedings of funds are progressed in series in place of the continual individual settlement that occurs in Real Time Gross Settlement (RTGS).
• NEFT performs on Public Key Infrastructure (PKI) that ensures end-to-end security. Indian Financial Network (INFINET) connects bank branches to enable computerized fund proceedings.

Advantages of using NEFT

Following are some highlighted advantages of using the NEFT mode of money transfer:

• The procedure is totally based on computerized money proceedings against physical money transfer, which saves both an individual's time and effort.
• The service charges levied in NEFT proceedings are too low.
• NEFT system is broadly reliable for making payments or collecting money online; after all, banks are obliged to follow RBI laws and regulations.
• NEFT is a time-saving process. As opposed to other payment ways, NEFT supports speedy settlements in accounts, which is beneficial for all the personal along with many businesses.

Pre-requisites of using NEFT

The most crucial need for operating NEFT is a bank account and working internet banking provisions in the bank account. The person or a business attempt to transfer capital using NEFT to mention all the information of the beneficiary in the requisition form.

The form chiefly contains the following details:

• Account Name- the name of the person or business as mentioned in their bank.
• Bank Name- the name of the bank for the transaction between two banks.
• IFSC (Indian Financial System Code) - It is an alphanumeric code allotted to all the bank accounts of every bank needed for the automized money transaction.
• Account Type
• Account number of the beneficiary

NEFT Timings

From August 2021, NEFT is available 24*7, and now we can make a fund transfer using NEFT mode at any time or any day of the week (even on national holidays). But, before august 2021, this was not possible, and we have to make NEFT transfer by strictly adhering to the timings of NEFT. Here, we will discuss the timings for transfer that were applicable before august 2021.

Transaction Timings for NEFT mode

The proceedings are structured in 11 batches from 8 A.M. to 7 P.M. from Monday to Friday. 6 Batches on Saturday 8 A.M. to 1 P.M. and are closed every month on the second and fourth Saturday. On Sunday and other bank holidays, no transactions are done. The transactions made after 7 P.M are cleared on the next working days. We can transfer money even after the working period or on the holidays, but they get settled on the upcoming working day.

Procedure

Let's discuss the procedure which is followed in every NEFT transfer, and by this procedure, only our fund is transferred through NEFT mode. Following is the procedure followed while doing a fund transfer using NEFT mode:

• The message through the bank of remitted is delivered to the pooling center (NEFT service center).
• The message is then passed on via the pooling center to the NEFT Clearing center to enable funds transfer in the upcoming batch.
• The clearing center that is maintained by the National Clearing Cell, RBI) settles fund transfer according to all the banks make mandatory accounting entries in their system and tally that with their bank accounting entries. Like the money received from the bank of remitter and transactions done to the targeted bank.
• The pooling center sends a message to the banks engaged in that particular proceeding.
• The beneficiary bank collects the capital and credits it in the account of the beneficiary.
• The substitute procedure is provided for the person or businesses that do not own any bank account by the money deposited in the bank and filling a requisition for the NEFT proceedings.
• To keep away from money laundering cases, the bank must verify and confirm the beneficiary.

How to make an NEFT transfer

We have discussed NEFT and the merits of the NEFT mode of fund transfer. But now, the question that arises here is that how we can make a fund transfer using NEFT mode. In this section, we will discuss the process and steps that we have to follow for making a fund transfer using NEFT mode.

Following is the process to make an NEFT transfer:

Step 1: You have to log in to your net banking account first and in case you don't have one, then register for it on your bank's web page.

Step 2: Add the recipient as a payee. With the purpose of doing so, fill the following information asked related to the recipient in the "Add New Payee" section:

• Account number
• Name
• IFSC Code
• Account Type

Step 3: Select NEFT as the fund mode of fund transfer after you add the payee.

Step 4: Now choose the account from which you want to transfer the amount, the payee, fill the amount you want to transfer, and if you want to add some remarks, you can do it too (it is optional).

Step 5: Now click on Submit.

We have to follow these steps correctly and in the same order as we have written down. By doing this process, we can make a fund transfer using NEFT very easily.

Eligibility to make an NEFT Transaction

Till now, we have learned about the NEFT fund transfer process and how to make a fund transfer through NEFT mode in this article. But, before we proceed further with initiating transactions or moving ahead in this article, we will look at the eligibility criteria for making fund transfer through NEFT. We will discuss the eligibility criteria set by RBI for making fund transfer through NEFT and who is eligible to use NEFT mode in this section.

The RBI provides the list of all the bank branches that are eligible for the NEFT scheme. The corporates, businesses, and person who have the bank account under the NEFT plan of action is allowed for the proceedings. The person who doesn't possess any bank account can also make fund proceedings using NEFT by going to the bank branch and giving them all the required information.

Transfer charges and fees for NEFT

It is to be noted that the transfer of money through is not completely (if anyone is thinking so). But, any of the transaction charges which is deducted during the transfer of money through NEFT mode is not paid by the receiver, and only the sender has to bear all the charges. That means if we are receiving money through NEFT, then no transaction charges will be levied from us in that case. But at the same time, if we are the sender (sending money to someone), we will be charged by the bank for every NEFT transaction. The question arises here: What is the transaction charges or fees while transferring money through NEFT mode. So, there is not a fixed answer for this question, and this is because that transaction charges for NEFT are different for every bank, and it also depends upon the amount we are transferring through NEFT.

Here, in this section of the article, we are not able to describe transaction charges for NEFT of every amount or every bank. But we will provide you here a table of NEFT transaction fees of a couple of famous banks in India, i.e., HDFC Bank and ICICI Bank. Following are two separate tables for HDFC and ICICI banks where we have mentioned the transaction fee charged by the bank while transferring money through NEFT, and we have also mentioned transaction fee respective to the amount:

NEFT transaction fee for HDFC Bank

NEFT transaction fee for ICICI Bank

The NEFT transaction charges or transfer fee details we have mentioned in the above two tables are up to date as per the official site of both the banks.

Paying credit card bills using NEFT

Yes, it is true; we can even pay our credit card bills using the NEFT mode of money transfer. This wasn't possible before, but it is possible now, and it is a very smooth & easy process so that anyone goes for it without a second thought about it. Paying credit card bills using NEFT was never easy as it is now, and we can even get some exciting awards for paying credit card bills using the NEFT mode of money transfer. This is the reason why most people nowadays love to pay their credit card bills using the NEFT mode of money transfer.

How to pay our credit card bills with NEFT mode?

In this section of the article on NEFT, we will mention all the necessary steps that we have to follow to pay our credit card bills using NEFT mode, and one thing we have to remember here is that we have to follow these steps in the same sequence as we are writing down here.

Following are the required four steps for paying credit card bills using the NEFT mode of money transfer:

Step 1: Firstly, we have to login into the internet banking account of our respective bank.

Step 2: The next step we have to follow is to add our credit card as a beneficiary (we will also talk about how we can add our credit card as a beneficiary in NEFT later). To perform this action, we must be aware of the IFSC code of our credit card as it is a mandatory detail.

Step 3: We have to enter the credit card number in the field of account number and add some other relevant details which are required to add a beneficiary.

Step 4: When we have filled in all the mandatory details that are required to add a beneficiary, we can see that our credit card is registered as a Payee for money transfer. Now, go to the section of 'NEFT fund transfer' in your banking account and make a fund transfer (which is equivalent to our credit card bill) towards our credit card (registered as a beneficiary) to pay its bills.

We can see that all these steps are so easy, and there is no rocket science while following these steps. After doing these steps, we can pay our credit card bills with the NEFT mode of money transfer so easily. Also, with the smooth and hassle-free process of paying credit card bills using NEFT, we can get some exciting rewards for it.

Adding credit card as a beneficiary for NEFT fund transfer

In the previous part of this section, while following the steps to pay credit card bills through NEFT fund transfer mode, we may get confused about how we can add a credit card as a beneficiary account for paying bills. Maybe some people find it very hard or confusing, and some people find it a very easy task, but adding a credit card as a beneficiary in our online banking account is as simple as adding the bank account of a person as a beneficiary. We just have to take care of some details of credit card that we have to fill in some particular while adding credit card as a beneficiary.

Here, in this part of this section, we will help you in adding your credit card as a beneficiary account so that you can easily pay your credit card bills through NEFT fund transfer mode. We have to enter the following details of the credit card in the respective field correctly so that we can add our credit card as a payee/beneficiary for NEFT credit card bill payment:

Step 1: Name of the Payee: In the 'Payee Name' file, we have to enter the same name as printed on our credit card.

Step 2 Account Number of the Payee: In the 'Payee Account Number' field, we have the add our credit card number correctly.

Step 3 Name of the Bank: In the 'bank name' field, we have to write down the name of the bank which issued the respective credit card.

Step 4 IFSC code of the bank: In the 'IFSC code of the bank' field, we have to write the IFSC code of our credit card. Now, most of us get confused here as we may not be aware of the IFSC code of our credit card, but this is a mandatory detail to add a credit card as a beneficiary account. To know about the IFSC code of our credit card, we have to refer to our bank (which issued the credit card) for this, and from there, we can get the correct and accurate IFSC code.

We can add our credit card as a beneficiary account for the NEFT fund transfer by following these steps or instructions. After adding a credit card as a beneficiary account, we can easily pay our credit card bills or can refer to the previous part of this section for this.

NEFT Inward

Till now, we have learned about NEFT and how to make fund transfer through NEFT in this article. Now, it's time to learn about the inwards of NEFT fund transfer and what NEFT inward is. Following are the NEFT Inward:

• As per the official website of RCB, it describes the NEFT fund transfer mode or process as a payment system in which we are allowed to do one-to-one fund transfer. Using the facility of NEFT fund transfer, we can transfer our funds (money) electronically from a branch of one bank to a branch of another bank very easily. We can also make a payment through NEFT fund transfer mode to a corporation or firm (which has an account in a branch of any bank in India).
• In the NEFT fund transfer system, the settlement requests for the fund transfer can be done in every half an hour. But we have to note that there are a total of twenty-three half-hourly batches available for the settlement request in NEFT, and these batches run from 8:00 A.M. to 7:00 P.M. on every working day of the week. Exceptions are in the timing of these settlement batches are for the second and fourth Saturday of every month in the NEFT fund transfer system.
• In case if we don't have an account in any bank, then we can use the NEFT fund transfer mode by always depositing the cash in the bank using the NEFT facility. The maximum cap for these cash remittances is restricted to Rs 50,000 for every transaction in the NEFT transfer system.
• After the sender completes the transaction through NEFT mode and money is sent to the receiver successfully, the receiver will usually receive the funds within two business hours. But sometimes due to unavoidable reasons this transfer can be delayed more than 2 hours.

Difference between NEFT, UPI & RTGS

In this article, we have learned about the NEFT mode of fund transfer, but we should be aware of other modes of fund transfer electronically as the NEFT fund transfer mode is not the only one. Other than NEFT, we have UPI (Unified Payment Interface) and RTGS (Real Time Gross Settlement), the other two most popular modes of the fund or money transfer electronically. Now, after knowing that we have other options than NEFT, a question in our mind may arise, i.e., Which mode of electronic fund transfer is best and with which mode we should go? Now, to answer this question, we have to look at many aspects such as time boundation, transaction fees, amount to be transferred, etc. Here, we will not discuss UPI & RTGS or the advantages or disadvantages of using UPI or RTGS. But we will draw a list of differences between these three modes of electronic fund transfer, i.e., NEFT, UPI, and RTGS, so that we can easily choose the best mode of fund transfer for us and don't have a second thought about it.

Following is the list of all differences between NEFT, UPI, and RTGS based on their category of properties:

Conclusion

In this article, we have learned about the NEFT mode of fund transfer. After going through this article of NEFT, we are able to make a Transaction for fund transfer through NEFT. We have learned about the transaction fee charged by the bank for every NEFT fund transfer. We are also able to pay our credit card bills through NEFT and adding a credit card as a beneficiary account. After learning about the merits of NEFT, we also saw the differences between NEFT, UPI, and RTGS mode of fund transfer.