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Neft – National Electronic Fund Transfer

National Electronic Fund Transfer is one of the most prominent electronic fund transfer systems of India. NEFT was introduced in November 2005, and it is a facility provided to bank customers to enable them to transfer funds quickly and securely to one account to another account. It is a nationwide payment system facilitating safe and secure transaction all over the country. In this article, we view the various aspects of NEFT in detail.


Under NEFT, funds are transferred using RBI’s (Reserve Bank of India)NEFT service to the credit account with the other participating. RBI works as the service provider and transfers the credit to the other bank’s account. NEFT operates on a deferred net settlement (DNS) basis which settles transactions in batches. In DNS, the settlement or transactions happens only at a particular point of time.

Advantages of NEFT

The benefits of NEFT given to the consumers are as follows:

  • Safe and Effective – For a flawless transfer of funds on the Internet, NEFT helps you to transfer any amount of money quickly.
  • Low Processing Charges– NEFT is flexible payment options which are very economical. To utilise this facility, you don’t have to pay a huge sum of money to your bank. The processing charges are economical, and you can transfer any amount of money without any difficulty.
  • Highly Dependable–NEFT, an integral aspect of Internet banking, is a highly dependable method of making payments and receiving funds online. In India, most of the banks are regulated under the norms set by RBI and, hence, the Internet banking facility too is quite safe.
  • Rapid Settlement–Unlike the regular banking methods of fund transfer, NEFT transfer is really quick, and you can enjoy rapid settlement of accounts, thereby improving the overall functionality of your business.

NEFT Process

The NEFT process consists of following steps are listed out below:

  • Request for NEFT by bank customer Data Entry at the Sending Bank Branch.
  • Processing or Data Upload at Sending NEFT Service Centre.
  • Transmission or submission of NEFT message to the NEFT centre.
  • Processing and transmission of NEFT message to the beneficiary banks. Data validation at receiving NEFT Service Centre.
  • Payment to the beneficiary.

Information Required for Remittance

The required information that the remitting customer would have to furnish at the time of remittance through NEFT are as follows:

  • Original cancelled cheque leaf (with pre-printed account holder name, account number and IFSC code) / if cheque leaf is not personalised, please provide the copy of latest bank statement (original) or bank attested statement/passbook).
  • IFSC code (11 digit character code appearing on your cheque leaf. If you do not find this on your cheque leaf, then please consult your bank).

NEFT Service Availability Durations

NEFT transactions will be forwarded to RBI based on the following schedule:

Day Start Time End Time
Monday to Friday 8:00 am 4:00 pm
Saturday 8:00 am 11:30 am

Note: The NEFT transactions will have slight variations in the transaction processing time depending upon the various bank.

Limit for NEFT Transactions

Type Minimum Maximum
NEFT No limit No limit

Processing Charges

The processing charges or service charges for NEFT transactions are tabulated below:

Type Amount Service Charge
NEFT Up to Rs.5 lakh Rs.5/-
For Rs.1 lakh and Rs.2 lakh and above Rs.2lakh



Note: For inward transactions charges for NEFT is no chargers will be levied.

NEFT System Transaction Procedure

The transaction process involved in NEFT is explained below in step by step procedure.

Step 1: Firstly, the remitter has to provide the requisite information like

  • Beneficiary’s Name.
  • Beneficiary’s Account number
  • Beneficiary’s Account type ( cash credit, loan account, etc.)
  • Bank name, location & base branch in which the beneficiary account is held.
  • IFSC code of beneficiary bank etc. to start the process of NEFT.

Step 2: The bank branch at which the fund transfer request originated, prepares a message and sends it to its pooling centre (also called the NEFT Service Centre).

Step 3: The pooling centre forwards the message to the NEFT Clearing Centre (operated by the National Clearing Cell, RBI, Mumbai) to be included in the next available batch.

Step 4: The RBI at the clearing centre sorts the transaction bank-wise and prepares to account entries to receive funds from(debit) the originating banks and give the funds to (credit) the destination banks. Therefore, bank-wise remittance messages are forwarded to the destination banks through their polling centre (the NEFT Service Centre).

Step 5: The destination banks receive the remittance messages from the Clearing Centre and pass on the credit to the beneficiary accounts.

Also, read about RTGS Click Here.