Do you recall the days when for every transaction, going to banks was the only option? Taking time out of the occupied calendar for visiting banks was in itself a very big task. Many times people would face difficulties in making financial transactions as some or the other important things or events in their lives collided with the time of making those payments.
However, as they say, "change is the rule of nature".
In the past two decades, technology changed the whole world by making everything go online. Suddenly, with the advent of digitization, everything; from buying groceries to heavy electronics, all could be done with a just single click from inside the four walls of comfort. The dream of cashless India seems to be coming true by such advancement in the technological sector.
One such system that eased the whole process of making financial transactions in India is the National Electronic Fund Transfer (NEFT), which is a digital mode of fund transfer and facilitates a quick and easy transfer of money from one bank account to another.
Let's have a deeper dive into this whole fund transfer system and check what are the conditions, pros and cons, and process of using NEFT.
National Electronic Fund Transfer (NEFT) allows individuals, organizations, and companies to do one-to-one bank transfers digitally.
Even if you and your recipient are associated with different banks, you can still easily deposit funds into their banks using NEFT, as long as both the bank accounts are NEFT enabled. However, in today's world where everything has gone digital, there would hardly be any bank account which does not provide the facility of NEFT.
With NEFT, there is no limit of a minimum or maximum amount that can be transferred. However, there is a cap of Rs. 50,000 if you are doing an in-person cash-based remittance within India.
Earlier, when an individual had to make a payment to somebody, they first had to withdraw money and then pay it either by cheques or in the form of cash. But now, through the process of NEFT, an individual can transfer money directly from their bank account to another person's bank account.
Here are some of the features of an NEFT transaction:
- NEFT can transfer money from any account of any bank branch to any other bank account located at any place or region.
- The NEFT process requires that the accounts of both the sender and the receiver should be NEFT enabled.
- For checking if your bank is NEFT enabled, you can just go on to the RBI's website where the list is mentioned or could just confirm the same by contacting your bank's customer service.
- The NEFT system also stimulates the one-way cross-border transfer of funds from India to Nepal. This is under the Indo-Nepal Remittance Facility Scheme.
If you are already using NEFT, you must be aware that the transactions in this system are carried out in batches. It means that NEFT works on a deferred settlement basis.
Earlier the NEFT timing of transactions was from 8:00 AM to 6:30 PM from Monday to Friday only. But after looking at the popularity of this system and the usage pattern, it has been decided by the authorities that the NEFT transfer facility will be available 24x7 for its users. This will be available for customers on all the days of the years, including the holidays.
It is known to very few that after the banking hours in India, the transactions under NEFT are expected to be automated transactions which are instigated using the 'Straight Through Processing (STP)' modes by banks.
There is a very simple and swift procedure that can be followed to transfer funds using NEFT. This procedure requires:
Step 1- Enter your login id and password to your online banking account.
Step 2- Go to the section of NEFT fund transfer.
Step 3- Enter the name, IFSC code and the bank account number of the recipient, and then add your beneficiary.
Step 4- When the beneficiary is added successfully, you can instigate an NEFT transfer. After this, enter the amount that is to be remitted and sent.
And voila! The transfer is done.
The Reserve Bank of India has listed down the participating bank branches, which are NEFT-enabled. This means that one can perform NEFT transactions via these bank branches only. As it has already been said, any individual, business or corporate, who carries a bank account with a branch that is participating, can indulge in an NEFT transfer at any point of time.
However, if there is someone who does have a bank account, they can also make a cash deposit at an NEFT-enabled branch, provided that they submit complete details in respect to their address, contact number, email id and other required details to the bank. Such transfers of NEFT shall be constrained to a maximum amount of Rs. 50,000 only.
Whenever the term NEFT comes in, the most frequently asked question is the limit on the fund transfer. Many people get confused regarding the payment limit with NEFT.
Well clearing this query, there is no upper or lower limit for transferring funds using NEFT.
You could start with even Rs. 1 and can go up to any amount you wish. But, there is only one limitation; the limit to the amount of one-time transaction, through cash mode, is Rs. 50,000.
However, different banks have their own set of rules and regulations. Therefore, depending upon each bank, the timings and settlement period for each transaction could be different.
When the transfer of funds takes place within the same bank account, the transaction could be completed within the same fraction of second. However, the same transaction could take a couple of minutes if the bank accounts are different.
Many people believe that the NEFT facility incurs a lot of charges. But this is not the case. There are no charges assigned with the inward transfers, i.e. there are no charges for recipients or beneficiaries.
However, when it comes to the register, charges applicable are:
- Rs. 2.50 for transfers up to Rs. 10,000
- Rs. 5 for transfers of Rs. 10,000 to Rs. 1 Lakh
- Rs. 15 for transfers of Rs. 1 Lakh to Rs. 2 Lakh
- Rs. 25 for transfers of more than Rs. 2 Lakh
A lot of people also feel that the services of NEFT are something relating to personal fund transfers only. Well, that isn't the full case.
The usage of NEFT is not just limited to transferring money from one bank account to another. You could use the NEFT facility to make the payments of loans, credit card dues and EMI's as well.
Following are some reasons that make NEFT transfers a popular choice:
- The biggest benefit of the facility of NEFT is that no physical presence is required anywhere.
- No physical documentation is required for this transfer, which makes the process quite swift.
- The process of NEFT transfer is very simple and efficient. It hardly takes minutes to conclude the transactions.
- NEFT takes all the measures of security and safety. Hence, it is very reliable to use.
- Internet banking can be initiated via NEFT transactions.
People often tend to get confused between the two terms, as they are both easy fund transfer facilities provided by banks. However, they are different.
RTGS stands for Real-Time Gross Settlement. Under the system of RTGS, the bank of the beneficiary gets transfer instructions instantly. As the name suggests, the settlement under RTGS is gross; it means that each transaction takes place separately. Such payments are ultimate and final and cannot be rescinded.
The only difference between NEFT and RTGS is that unlike in the system of RTGS, the settlement of money transfer takes place in batches. Time slots on an hourly basis are fixed for the purpose, and the settlement is allocated to one such time slot.
Still confused about the difference between NEFT and RTGS the ? Then click here to clear it all.
In today's world where life has become extremely busy, and people hardly get time to make things happen through their physical presence, NEFT comes in not as a facility but definitely as a necessity. With facilitating everything from paying for online shopping to paying off EMIs and heavy loan amounts, NEFT has become an integral part of the digital world.
But as it said, everything is good to an extent. Therefore, the usage of the NEFT should be done precisely and in an exact manner. It is always advisable that one should not opt for such services until you have the complete and exact information about the same, in order to avoid any loss through financial transactions.