What is NEFT? || How does NEFT work?

What is NEFT?
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NEFT: In this post you will know that what is neft, How does NEFT work, How to use NEFT? and Full form of NEFT. At present, there are many options available to send money from one bank to another bank account such as RTGS, NEFT, IMPS. Banking process has become very fast through internet, you can transfer money instantly to any bank account in any corner of the country. In this post we will discuss about NEFT. Through NEFT, you can transfer money from one account to another by visiting your bank or sitting at home through net banking.

What is NEFT?

National Electronic Funds Transfer (NEFT) is an easy and simple system service of a banking payment or fund transfer, through which we can send money to any bank account i.e. from one bank account to another bank account across the country.

This service was launched by the Reserve Bank of India (RBI) in November 2005, and is currently available in almost all banks in India. Transfer of money in NEFT does not happen in real time like RTGS but in hourly batches.

NEFT is launched by the Institute for Development and Research in Banking Technology (IDRBT) which was started in November 2005. IDRBT is an engineering institute created by the Reserve Bank in 1996.

What is neft

What is the full form of NEFT?

NEFT – National Electronic Fund Transfer

How does NEFT work?

Here I have tried to explain to you the generic process of NEFT transfer, but these nuances may vary in different banks, yet the process is almost the same.

  • As I have already told you that how you have to fill the form in details through online or offline mode, you have to provide complete information about the beneficiary. With this, how banks authorize it and process it further.
  • After this your bank issues a message and then sends it to their NEFT Service Center.
  • NEFT forwards this message from your bank to NEFT Clearing Center which is operated by National Clearing Cell and with it it is a part of Reserve Bank of India in Mumbai and it includes it next available In branch of transaction.
  • After this, the NEFT Clearing Center sorts all the funds transfer transactions according to its banks and decorates those entries in such a way that the banks on which your money has to go are sorted very easily. NEFT Service Center then receives messages where they get all the entries sorted, along with they also get messages about money from NEFT Clearing Center, where they are instructed to send funds to the receiver’s account.

Fees and Charges of NEFT Transfer?

You have to pay service charges on fund transfer through NEFT. Which is as follows.
10000 = 2.5 + (GST)
Above 10000 but less than 1 lakh = 5 + (GST)
Above 1 lakh but less than 2 lakh = 15 + (GST)
25+ (GST) for above 2 lakhs
There may also be a change in the charges given above, you can find out in the bank for the current charges.

Timings of NEFT Transactions

NEFT works on all working days of the bank, if we talk about time, it happens in 23 half hourly batches from 8:00 am to 7:00 pm. There is no settlement on the second and fourth Saturdays of the month. There is no transaction even in weekly holidays and public holidays. (timing can be changed)

Some special features of NEFT –

  • Transferring money through this is very easy and safe.
  • There are very few charges for transferring money through this, which are negligible.
  • In this, if the money is not transferred within 24 hours, the entire money is returned to your account.
  • There is no charge to be paid by the person receiving the money through NEFT.
  • NEFT can be done both online and offline.
  • You do not need to go to the bank to do NEFT online. You can transfer money from your home by doing NEFT online.
  • Through this, any company or institution can easily transfer money from one account to another.

Also read –

> What is RTGS | How to Make RTGS Payment?

> What is e-RUPI? || How Does it Work?

How to use NEFT?

The facility of National Electronic Funds Transfer is provided to the customers in two ways. Consumers can use this service both online and offline. Let us know how both online NEFT and offline NEFT work.

To transfer money online through NEFT, the consumer will first have to activate internet banking in his account. After which he can use this service online. Apart from this, there are some banks that are providing the benefit of this service to their customers through ATMs as well. That is, the consumer can also do NEFT through ATM.

To transfer money through this, first you must have the bank details of the beneficiary. Eg :- Bank Name, Account Holder Name, Account Number, Branch Name, Account Type, IFSC Code, etc. After entering all the bank details, submit and send the information to the bank.

After which the bank prepares the information given by the consumer in the form of a message and sends it to the pooling center, which is also called NEFT Service Center. After this, that message is sent by the pooling center to the NEFT Clearing Center. So that that message can be included for the next available batch. It is run by the National Clearing Cell of the Reserve Bank of India, which has its office in Mumbai.

The clearing center then sorts all the funds according to the destination bank. After this, after receiving the funds from the sender’s bank, the receiver prepares the receiving entries for sending to the bank. After this the message is forwarded to the receiving bank one by one. After which the receiver receives the message from the bank clearing center and credits the money in the beneficiary’s account.

What is the difference between RTGS and NEFT

In this, you can send from 1 rupee to 10 lakh rupees.In RTGS, money cannot be transferred less than 2 lakhs, in which at least 2 lakhs or more funds are transferred.
In this, it takes about 24 hours for the fund transfer to happen i.e. to complete the transaction.Funds are transferred in half an hour (30 minutes).
It works on Hourly Batches.It works on Real Time System.
Funds cannot be transferred more than 10 lakhs in this.Can’t send money less than 2 lakhs in this.
This is a slow method of transferring funds.This is a fast method of fund transfer.
In this transaction charges are less than RTGS.In this transaction charges are more than NEFT.
In this, money can be transferred both online and offline.Money can also be transferred in RTGS both online and offline.


1. What is National Electronic Funds Transfer (NEFT) system?

Ans: National Electronic Funds Transfer (NEFT) is a nation-wide centralised payment system owned and operated by the Reserve Bank of India (RBI). 

2. What happens if I write wrong account number of beneficiary?

Ans: The credit is given to the account number written / given by remitter in his / her application / instruction. Credit to beneficiary account is released solely based on account number. It is the responsibility of remitting customer to write correct account number. The originator / sender should exercise due care in providing the correct account number of the beneficiary, in the NEFT remittance instruction / application.

3. Can I use NEFT to transfer funds from / to NRE and NRO accounts?

Ans: Yes, NEFT can be used to transfer funds from / to NRE and NRO accounts in the country. This, however, is subject to the adherence of the provisions of the Foreign Exchange Management Act, 2000 (FEMA) and Wire Transfer Guidelines.

About the author


Tech Writer - 150+ articles published on Edu Tech Gyan since 2021
For as long as I can remember, I have been interested in technology. I have loved gadgets and understanding how things work since a young age. Since graduating, I've worked for tech companies.

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