NEFT stands for National Electronic Funds Transfer, which is an electronic funds transfer system maintained by the Reserve Bank of India (RBI) . It enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a one-to-one basis via electronic messages. NEFT is one of the various methods of online money transfer and is regulated by the RBI. Unlike real-time gross settlement, fund transfers through the NEFT system do not occur in real-time basis. Previously, NEFT system settled fund transfers in hourly batches with 23 settlements occurring between 00:30 hrs. to 00:00 hrs. However, in December 2019, the RBI introduced the all-new NEFT payment system that is active and up 24×7 and 365 days a year. NEFT transfers are settled in half-hourly batches every day between 00:30 am and 00:00 am all through the year. There is no limit, either minimum or maximum, on the amount of funds that can be transferred using NEFT.

To initiate an NEFT fund transfer, the sender must fill out an “application” or transfer request, providing the recipient’s name, name of their bank, the bank’s IFSC (Indian Financial System Code) number, their account information, and the amount to be transferred. Any account holder, whether an individual, firm, or corporate, can carry out NEFT transactions, provided that the banks of both the parties must be NEFT-enabled. The receiver and sender of the funds get notified instantly upon completion of the transaction. NEFT transactions can be processed only between the banks that offer NEFT-enabled services.

NEFT makes the transfer of funds easy, convenient, and feasible. All NEFT transactions take place online; hence, there is no involvement of a third party. Owing to the involvement of RBI, NEFT transactions are completely safe and secure. NEFT does not require cheques or demand drafts while transferring money; hence, it is economical. Apart from transferring money, NEFT can also be used to pay loan installments, credit card dues, EMIs, etc. .

The NEFT system has a single-transaction limit of ₹50,000 per NEFT transfer, though there is no overall limit to how much money may be transferred across the entire system. There is a tiered system of fees to send funds via NEFT. Transactio...