What is the full form of NEFT:

NEFT represents National Electronic Funds Transfer.

As the name suggests it is a method of transferring money from one account to another through electronic funds transfer system. It was first started in November 2005 in India. It provides the facility of transferring funds easily and securely on one to one basis. The transfer of money is done through electronic messages. RTGS is also a method of fast transferring of funds. But NEFT is different as it is not a real time basis method. The transfer of funds is executed in hourly batches. This results in time lag. It is not done immediately. This facility is available in more than 30,000 branches of different banks across the country. It is one of the most popular modes of transferring money.

For transferring the money, the customer first needs to fill up an application form and provide the details of the beneficiary. The details include the account number, account type, IFSC code, name of the beneficiary, bank name and branch name and the amount which needs to be transferred. The remitter needs to authorize all the details and ask the branch to debit the amount from his account. Many banks provide this facility through ATMs and through online banking.

Now, the branch prepares a message and sends it to the NEFT service centre. The pooling centre or the service centre of NEFT then forwards this message to the NEFT clearing centre which is operated by the Reserve Bank of India which is located in Mumbai.

The clearing centre then sorts all the transfer transactions bank wise, and then debit the amount from the source bank and credit it into the destination bank. Once this process is done, a message is sent to the receiving bank through the pooling centre. The destination branch then credits the beneficiary account with the amount which has been transferred.

The customer is charged for availing the NEFT facility. For example, transactions up to Rs. 1000 are charged Rs. 2.5 (+ the service tax). There are twelve settlement batches run on weekdays from 8:00 in the morning to 7:00 in the evening. On Saturdays the batches run 8:00 am to 1:00 pm. On Sundays this facility is not available.