Goseeko blog

What is NEFT ?

by Uddipana Gogoi

NEFT stands for National Electronic Fund Transfer is a centralized payment system of India. It is an electronic funds transfer system and maintained by the Reserve Bank of India (RBI). Accordingly, it facilitates electronic transfer of funds from one bank to another bank to the users like individuals, banks, corporates, firms, business units electronically. Again, NEFT provides services 24×7 on half yearly batches with maximum Rs. 50000 limit per transaction for transfer of funds. 

Charges for the transactions

Maximum charges which can be levied for outward transactions at originating bank for other transactions –

– For transactions up to ₹ 10,000 : not exceeding ₹ 2.50 (+ Applicable GST)

– transactions above ₹ 10,000 up to ₹ 1 lakh: not exceeding ₹ 5 (+ Applicable GST)

– transactions above ₹ 1 lakh and up to ₹ 2 lakhs: not exceeding ₹ 15 (+ Applicable GST)

– And for transactions above ₹ 2 lakhs: not exceeding ₹ 25 (+ Applicable GST)

Steps involved in NEFT

  1. Firstly, an individual / firm / corporate willing to transfer funds through NEFT has to provide details of the beneficiary such as, name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number, etc. for addition of the beneficiary to his/her internet/mobile banking module. 
  2. Secondly, the originating bank prepares a message and sends the message to its pooling center, also called the NEFT Service Centre.
  3. Then the pooling center forwards the message to the NEFT Clearing Centre, to be included for the next available batch.
  4. Additionally, the Clearing Centre sorts the funds transfer transactions beneficiary bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the beneficiary banks (credit). Thereafter, bank-wise remittance messages are forwarded to the beneficiary banks through their pooling center (NEFT Service Centre).
  5. Finally, the beneficiary banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.


NEFT offers the following advantages for funds transfer or receipt:

  • Round the clock availability on all days of the year.
  • Near-real-time funds transfer to the beneficiary account and settlement in a secure manner.
  • Pan-India coverage through a large network of branches of all types of banks.
  • Positive confirmation to the remitter by SMS / e-mail on credit to beneficiary account.
  • Penal interest provision for delay in credit or return of transactions.
  • No levy of charges by RBI from banks.
  • No charges to savings bank account customers for online NEFT transactions.
  • Besides funds transfer, it is uses for a variety of transactions including payment of credit card dues to the card issuing banks, payment of loan EMI, inward foreign exchange remittances, etc.
  • Available for one-way funds transfers from India to Nepal.

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