FAQs About NEFT | Basic Information About NEFT Process

If you have tried transferring money electronically to an individual or an account, you would’ve come across the terms NEFT, RTGS and IMPS. Most of us are not really aware of the difference between the various models and on what occasions they have to be used.

Q1. What is NEFT?

Ans : National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme.

Inter Bank Transfer enables electronic transfer of funds from the account of the re-emitter in one Bank to the account of the beneficiary maintained with any other Bank branch. There are two systems of Inter Bank Transfer - RTGS and NEFT. Both these systems are maintained by Reserve Bank of India.

1. RTGS [Real Time Gross Settlement] : This is a system where the processing of funds transfer instructions takes place at the time they are received (real time). Also the settlement of funds transfer instructions occurs individually on an instruction by instruction basis (gross settlement). RTGS is the fastest possible interbank money transfer facility available through secure banking channels in India.
2. NEFT [National Electronic Fund Transfer] : This system of fund transfer operates on a Deferred Net Settlement basis. Fund transfer transactions are settled in batches as opposed to the continuous, individual settlement in RTGS.

Q2. Are all bank branches in the country part of the NEFT funds transfer network?

Ans : For being part of the NEFT funds transfer network, a bank branch has to be NEFT- enabled.

Q3. Who can transfer funds using NEFT?

Ans : Individuals, firms or corporates 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 deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT. However, such cash remittances will be restricted to a maximum of Rs.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.

Q4. Who can receive funds through the NEFT system?

Ans : Individuals, firms or corporates 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-waycross-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 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. 

Q5. Is there any limit on the amount that could be transferred using NEFT?

Ans : No. 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 Rs.50,000/- for cash-based remittances and remittances to Nepal.

The RBI has not set a value for the maximum amount possible to be transferred using NEFT/RTGS/IMPS, but RBI allows banks to place per transaction limits based on their own risk perception with the approval of its Board. Visit your bank website to know the exact amount and charges.

Q6. Whether the system is centre specific or has any geographical restriction?

Ans : No. There is no restriction of centres or of any geographical area within the country. The NEFT system takes advantage of the core banking system in banks. Accordingly, the settlement of funds between originating and receiving banks takes places centrally at Mumbai, whereas the branches participating in NEFT can be located anywhere across the length and breadth of the country.

Q7. What is the mandatory information required to make an RTGS & NEFT payment?

Ans : For effecting an RTGS/NEFT remittance the remitter has to furnish the following information:

• Amount to be remitted.
• Remitting customer's account number which is to be debited
• Name of the beneficiary bank.
• Name of the beneficiary.
• Account number of the beneficiary.
• Sender to receiver information, if any
• IFSC code of the destination bank branch

Q8.  What are the charges for NEFT transfers ?

Ans : For NEFT and RTGS charges vary from bank to bank, but the RBI has set a maximum limit on what the banks can charge customers. Visit your bank website to see their charges.

 

Q9. How is IMPS different from NEFT ?

Ans : IMPS (Interbank Mobile Payment Service/Immediate Payment Service) is a mobile based payment mechanism introduced in 2010 by the National Payments Corporation of India [NPCI] to allow customers to transfer money instantly, facilitating instant remittance across multiple platforms.

 

Q10. How is RTGS different from NEFT ?

Ans : RTGS transactions are usually to transact in larger amounts in real time, the minimum amount required is Rs 2 lakhs and the maximum* amount is Rs 5 lakhs. RTGS transactions happen between banks in real time and on a gross basis. As this mechanism operates in real time, i.e sans any waiting period, and on a gross basis, i.e settled individually unlike in batches, it is the fastest way to transfer money electronically.

 

Process Followed in NEFT