NEFT Full Form: Know All About NEFT Here!
By BYJU'S Exam Prep
Updated on: September 25th, 2023
NEFT Full Form: NEFT is short for National Electronic Fund Transfer. It is a payment system that allows transactions to happen electronically across the country. A user who has an account can transfer funds from one bank account to another. For NEFT transactions to occur, the bank account making or receiving the funds should be a bank branch in the country participating in the NEFT scheme. These transactions can also happen through internet banking and mobile banking. The Reserve Bank of India monitors the NEFT payment method. NEFT can be done at any point in time and is one of the best cashless payment gateways.
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History Of NEFT
The NEFT payment gateway was established in the year 2005. The Reserve Bank of India manages it. This system was set up by the Institute for Development and Research in Banking Technology. According to a recent report in 2019, NEFT is available across India at about 1,48,477 branches. These are widespread across 216 banks. The clearing centre is operated by the National Clearing Cell, RBI, located in India.
How Does The NEFT Payment Work?
To carry out transactions through NEFT, the following information is necessary- the amount of money to be transferred, beneficiary name, account number, IFSC code of the receiver’s bank branch, your account number, name of the beneficiary bank, etc.
Before you transfer money, you need to add a beneficiary to your list. Following this, you are allowed to transfer money after 30 minutes. Once this is processed, the bank sends a message to the National Electronic Funds Transfer Service Center. This acts like a pooling centre that the RBI operates. This is followed by the Clearing Center sorting the funds, debiting the money from your account, and finally crediting it to the beneficiary’s account. One can also visit the bank to add a beneficiary. However, it is a hectic process.
Initially, the NEFT settled funds in hourly batches. Through hourly batches, the number of settlement batches was almost 23 hours. This was further reduced to half-an-hour in the year 2016. Half-an-hour settlement batches per day were about 48. As of 2019, the settlement takes place round-the-clock, making it almost real-time.
Is The NEFT System Beneficial?
- It is available almost at any point in time.
- The RBI does not pose any charges from banks for using this system.
- The fund transfer to the beneficiary from this system is almost real-time.
- The settlement of funds through this system happens securely.
- This system is linked across India, making fund transfer fast and efficient.
- The customers having a savings bank account need not pay any charges to use this NEFT system.
- Along with transferring funds, one can use this system to pay credit card bills, loans, etc.
- Apart from transferring funds across India, one can also use this system to transfer funds from India to Nepal.
NEFT is one of the most effective measures to transfer funds. This article, along with helping you understand the full form of NEFT, will also help you comprehend the system in detail and banking methodologies as an Indian citizen. Understanding these acronyms will also be helpful in government job exams.
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