In a trailblazing move, The Reserve Bank of India (RBI) has enabled around-the-clock availability of the National Electronic Fund Transfer (NEFT), joining an elite group of countries boasting 24×7 fund transfer facilities. Furthermore, savings account holders are relieved of any charges on fund transfers accomplished through the NEFT system when initiated online, via internet banking or mobile banking applications.
Key Developments with the New Implementation
The inception of this round-the-clock NEFT facility places India in the group of countries having payment systems that endorse any value of fund transfers, at any time of the day. This development brings manifold benefits to customers, who can now execute money transfers through NEFT without paying any charges. Previously, banks would levy a fee for the same service provided through cheques and Demand Drafts (DD).
NEFT’s Journey since 2005
Launched in 2005, the NEFT system has experienced substantial growth in its usage over the past decade, emphasising its popularity and increasing customer acceptance. Despite such growth, several banks persisted in charging their customers the maximum permissible fees. Considering the volume of transactions, it was deemed necessary that the accruing benefits be passed onto the customers, encouraging more extensive use of the electronic payment system instead of paper-based mechanisms like cheques/DDs.
Facts about NEFT
| NEFT Introduction Year | Description |
|---|---|
| 2005 | NEFT is a nation-wide payment system facilitating one-to-one funds transfer. |
| RTGS vs NEFT | In RTGS, there is continuous and real-time settlement of fund-transfers, individually on an order by order basis. NEFT settlements happen in batches, potentially causing a slight delay for the actual transfer to occur. RTGS transactions happen in real time. |
| Transfer Limit | In NEFT, there is no lower or upper limit on the amount of funds that could be transferred. However, the maximum amount per transaction is limited to ₹ 50,000/- for cash-based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme. The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper or maximum ceiling. |
What is National Electronic Fund Transfer (NEFT)?
National Electronic Funds Transfer (NEFT) is a nation-wide payment system that enables one-to-one funds transfer. With this scheme, individuals, firms, and corporations can electronically transfer funds from any bank branch to any individual, firm, or corporate that has an account with any other participating bank branch in the country.
Although NEFT might seem similar to the Real Time Gross Settlement (RTGS), these systems are quite different. RTGS is a system where there is continuous and real-time settlement of fund-transfers, individually on a transaction by transaction basis. Unlike the real-time processing of RTGS, NEFT settlements occur in batches, causing a minor delay in the actual transfer.