National Electronic Fund Transfer better known as NEFT is an electronic payment mechanism that allows individuals, including body corporates, to execute monetary transactions across the nation.
No platform or geographical limitations
Individuals, with the help of NEFT, can transfer money from their bank account to the bank of account of the counterparty without any paper trail. The service can be performed for inter and intrabank transactions. Moreover, the core banking facility works as an added advantage as the transaction can be executed from any branch in the country of the particular bank where the individuals hold his account.
Once the transaction is executed the bank is required to send the confirmation notification to the customer via SMS or email. This helps the individual to keep track of his dealing from anywhere in the country.
NEFT transfers are not only useful for Individual fund transfer but also can be used for transactions like loan EMIs and credit card bill settlements.
Is a bank account necessary for NEFT?
For executing a NEFT transaction there is no need for the individual to have a bank account with the bank branch. If the branch is NEFT enabled NEFT can be executed by depositing the amount, meant for transfer, in cash and by paying the requisite charges
Also Read: Why Do We Need The Bank MICR Code?
NEFT works like e-cheques; therefore, they are executed in batches and not in real time basis. In most banks, the transactions on weekdays are settled in 11 batches and the transaction on weekends are settled in 5 batches.
Limitation of transactions
Like any other money transfer system, there is a limitation on how much you can transfer through NEFT in one transaction. Currently, the limit is stipulated at Rs. 50,000 per transaction for remittance within India and to Nepal. There is no maximum or minimum limit for the amounts that are transferred during the day.
Delay in execution or return
Generally, the transaction goes through in two working days i.e. the recipient shall receive the monies through NEFT within two working days.
If there is a delay in executing the transaction at the bank’s end the bank is liable to compensate for the delay with penal interest paid to the customer. The interest rate would be at the rate indicated by RBI plus 2% for the number of days delay or till the date of refund of the amount in case of return.
The IFSC code is necessary for executing any transaction through NEFT as it helps to indicate the bank branch through which the amount to be debited from and also identifies the creditor branch. This ensures security and backtracking of the NEFT transactions.