National Electronic Funds Transfer
Also called: NEFT · Topic: Payment Systems and Digital Finance · NCERT: Beyond NCERT
Meaning
National Electronic Funds Transfer (NEFT) is an electronic system for sending money from one bank account to another anywhere in India. RBI has run it since 2005. It uses deferred net settlement: payments are pooled and settled in half-hourly batches, 48 a day, and only the net difference between banks moves. Because of this, banks need much less ready money (liquidity), but the receiver waits a short time. NEFT has worked 24×7×365 since December 2019, and there is no minimum or maximum amount. RBI waived its own NEFT processing charges from July 2019. Online NEFT for savings accounts is now generally free.
Example
A parent sends ₹5,000 by NEFT to a child studying in Pune. The transfer goes out in the next half-hourly batch and reaches the child's account shortly after.
Don't confuse with
- RTGS (Real Time Gross Settlement): RTGS settles each payment individually and immediately, with a minimum of ₹2 lakh. NEFT settles in batches and has no minimum.