National Electronic Funds Transfer (NEFT) is a widely used mode of money transfer because of the availability of high transfer limits and fewer conditions on the amount transfer. This article discusses the below topics on NEFT transfer:
NEFT is an electronic fund transfer method that uses internet banking or mobile banking to transfer funds from one bank account to another within the same bank or two different banks. It also facilitates automatic payment by a bank account for regular expenses such as EMIs or credit card bills. The NEFT system works in the below manner:
(1) Firstly, an individual will initiate the fund transfer request using an online or mobile banking service offered by his bank. Then, he has to add the beneficiary to his banking module. For this, he will have to enter the details of the beneficiary, such as the name of the beneficiary, name of the bank and branch of the beneficiary, IFSC of the beneficiary branch, account number, account type, etc.
The beneficiary can be added by offline mode by filling the application form available at the bank branch and authorising the bank to debit his account as per the amount requested in the NEFT application form.
(2) The originating bank then prepares a message and sends it to the NEFT Service Centre. It is also called a pooling centre. The pooling centre will, in turn, forward the message to the RBI operated NEFT Clearing Centre.
(3) The clearing centre sorts the transfer request based on the beneficiary bank. It then prepares account entries to receive funds from originating banks and give funds to the beneficiary bank. The respective payment messages are then forwarded to the beneficiary banks by the pooling centre.
(4) On receiving the payment messages, the bank will transfer the payment.
There is no limit on the minimum and maximum amount you can transfer using NEFT. The minimum amount that can be transferred can be as low as Re.1. Similarly, RBI has not imposed any transfer limit for the maximum amount. But, banks may impose limits such as Rs.2 lakh per transaction, based on their risk perception.
In cash transactions, the maximum amount that can be transferred per transaction is Rs.50,000. But, there is no limit on the total amount one wants to transfer. Recently, RBI introduced the NEFT facility available 24/7.
Any individual, firm or corporate body maintaining its account with the member bank (any bank in the country participating in the NEFT system) can transfer funds to any individual, firm or corporate body using the NEFT system.
List of member banks- https://rbi.org.in/scripts/neft.aspx
NEFT transfer limit can be used for purposes other than a transfer of funds such as:
A business can change the NEFT transfer limit within limits set by the bank as per its risk perception. It can be done online and offline by visiting the bank branch.