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What Is NEFT and How Does It Work

Indian payment gateway

About NEFT

National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained by the Reserve Bank of India (RBI). Started in November 2005, the setup was established and maintained by Institute for Development and Research in Banking Technology. NEFT enables bank customers in India to transfer funds between any two NEFT-enabled bank accounts on a one-to-one basis. It is done via electronic messages.

Unlike real-time gross settlement, fund transfers through the NEFT system do not occur in real-time basis. Previously, NEFT system settled fund transfers in hourly batches with 23 settlements occurring between 00:30 hrs. to 00:00 hrs.

From 16 December 2019, there would be 48 half-hourly batches occurring between 00.30 am to 00:00 am every day regardless of a holiday or otherwise.

As of 30 November 2019, NEFT facilities were available at 1,48,477 branches/offices of 216 banks across the country and online through the website of NEFT-enabled banks. NEFT has gained popularity due to the ease and efficiency with which the transactions can be concluded.

There is no limit – either minimum or maximum – on the amount of funds that can be transferred using NEFT.


The National Electronic Funds Transfer system is one of the various methods of online money transfer. It is regulated by the RBI and hence, works as per the guidelines laid down by RBI.

  • NEFT is a one-to-one payment facility
  • NEFT transactions can be processed only between the banks that offer NEFT-enabled services
  • Transactions made through NEFT do not take place in real-time; implying that it takes a few days for NEFT transactions to complete
  • Before December 2019, RBI had fixed timings during which NEFT transactions can be processed. Any NEFT transaction will be processed only between 8:00 AM and 6:30 PM from Monday to Friday, and 8:00 AM to 12:00 PM on Saturdays. However, from 2020, NEFT transactions can be performed 24*7
  • To transfer funds through NEFT, you must add beneficiaries on the internet banking portal of your required bank
  • There are no limits on the amount of NEFT transactions
  • There is a fee applicable on all NEFT transactions; the amount varies from Rs. 2.5 to Rs. 25, depending on the amount being transferred
  • As per RBI guidelines, the payments made via NEFT are processed and settled in batches of half-hour


Among all the other methods of online money transfer, here’s why you can opt for NEFT (National Electronic Funds Transfer)-

  • NEFT makes the transfer of funds easy, convenient and feasible
  • All NEFT transactions take place online; hence, there is no involvement of a third party
  • Owing to the involvement of RBI, NEFT transactions are completely safe and secure
  • The receiver and sender of the funds gets notified instantly upon completion of the transaction
  • NEFT does not require cheques or demand drafts while transferring money; hence, it is economical
  • Any account holder, whether an individual, firm or corporate can carry out NEFT transactions. The only required condition is that the banks of both the parties must be NEFT-enabled
  • Apart from transferring money, you can also use NEFT to pay your loan installments, credit card dues, EMIs, etc.
  • Read More: NEFT vs RTGS: What’s the Difference?

How NEFT Works

Transfer of funds via NEFT is simple and convenient. Here’s what you need to do-

  • Log in to the your internet banking account
  • On the main page, click on ‘Fund transfer’
  • From the drop down menu that appears, select ‘NEFT
  • Note that you need to ‘Add beneficiary’ to the list of beneficiaries in your account if you haven’t done so already
  • To add a new beneficiary, you need to click on ‘Add beneficiary’ option on the page
  • Enter the beneficiary’s required information such as his/her name, bank account number, IFSC, etc.
  • Click on ‘Confirm’ or ‘Add’
  • To authenticate this step, you will be asked to enter the OTP sent to your registered mobile number
  • After doing so, your action would be processed. It will take around 24 hours to add a beneficiary
  • Once the beneficiary is added to your account, you need to select the beneficiary details (to whom you need to send the money) from your list of beneficiaries
  • Enter the amount that needs to be transferred and confirm your transaction
  • Click on ‘Confirm’ and the amount will be transferred from your bank account to the other’s.

Charges Applicable on NEFT Transactions

NEFT transactions involve the following additional charges as money transfer fee.

Transaction AmountFee Amount
Less than or equal to Rs. 10,000Rs. 2.5
Between Rs. 10,000 and Rs. 1 LakhRs. 5
Between Rs. 1 Lakh and Rs. 2 LakhRs. 15
Equal to or more than Rs. 2 LakhRs. 25
Charges Applicable on NEFT Transactions


What are the NEFT timings?

Until December 2019, NEFT transactions could be performed only between 8:00 AM and 6:30 PM from Monday to Friday, and between 8:00 AM and 12:30 PM on Saturdays. NEFT transactions cannot be performed on Sundays. However, starting January 2020, NEFT transactions can be performed at any time, on any day and from anywhere.

Is it important to add a beneficiary to send money through NEFT?

Yes, it is absolutely necessary to add a beneficiary to your internet banking account in order to transfer money through NEFT. The beneficiary should be added before starting the process of money transfer as it takes around 24 hours time to add a beneficiary.

What is the NEFT transfer limit?

There is no limit on the minimum amount or maximum amount that can be transferred via NEFT. However, if you make NEFT transactions through cash, then the maximum amount that you can transfer is Rs. 50,000.

How much time does it take to settle NEFT transactions?

All NEFT transactions can be settled within 24 hours. The actual time required for the settlement of these transactions, however, may vary from bank to bank.

Are NEFT transactions chargeable?

Yes, NEFT transactions are chargeable. For transactions ranging from Re.1 to Rs. 10,000, you will be charged Rs. 2.5. On transfers ranging between Rs. 10,000 and Rs. 1 Lakh, Rs. 5 will be charged. If the transaction amount is between Rs. 1 Lakh and Rs. 2 lakh, then Rs. 15 will be charged. An amount of Rs. 25 will be charged on transactions equal to or more than Rs. 1 lakh.

Who can make NEFT transactions?

Any individual, firm or company can carry out NEFT transactions. It is only mandatory that the account holder’s bank account is NEFT-enabled for the transaction to take place.

Can I make a NEFT transaction on the weekend?

Yes, you can initiate a NEFT transaction on the weekend. However, the transaction will be processed only on the next working day.

What is NEFT?

NEFT stands for National Electronics Funds Transfer. It is an electronic fund transfer system that is maintained by the Government of India and the RBI. NEFT allows the transfer of funds from one NEFT-enabled bank account to the other.


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