The full form of NEFT is National Electronic Funds Transfer. National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained by the Reserve Bank of India. It was started in November 2005, the setup was established and maintained by Institute for Development and Research in Banking Technology. NEFT enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a singular basis. It is done via electronic messages. As we have discussed the full form of NEFT, now we will see different information related to NEFT.
As of 30 November 2019, NEFT facilities were available at 1,48,477 branches/offices of 216 banks across India and online through the website of NEFT-enabled banks across all countries. NEFT has gained popularity due to the ease and efficiency with which the transactions can be concluded.
Process of doing NEFT
After the full form of NEFT, we will see the process of how to do NEFT from one bank to another or within the same bank. We have to follow the below steps:-
The customer fills up an application form providing details of the beneficiary (like name, bank, branch name, IFSC, account type, and account number) and the amount to be transferred. The remitter authorizes his/her bank branch to debit his account and remit the specified amount to the beneficiary. This facility is also available through online banking, and some banks also offer the NEFT facility through ATMs.
The originating bank branch prepares a message and sends the message to its pooling center (also called the NEFT Service Centre).
The pooling center forwards the message to the NEFT Clearing Centre (operated by National Clearing Cell, Reserve Bank of India, Mumbai) to be included in the next available batch.
The Clearing Centre sorts the funds transfer transactions destination bank-wise and prepares to account entries to receive funds from the originating banks (debit) and give the funds to the destination banks (credit). Thereafter, bank-wise remittance messages are forwarded to the destination banks through their pooling center (NEFT Service Centre).
The destination banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.
Settlement timings for NEFT Transaction
NEFT transfers are settled in half-hourly batches every day between 00:30 am and 00:00 am all through the year.
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