NEFT full form

NEFT Full Form

The question of NEFT Full Form has been often raised by bank customers in India because the abbreviation is increasingly used in banking platforms since the beginning of the millennium. In this article, we will discuss the expansion of NEFT full form in banking, the concept of NEFT, how it operates, and how it is important for millions of bank customers doing banking transactions online.

NEFT Full Form refers to the National Electronic Funds Transfer, which is a nationwide centralised payment system introduced in India in 2005. The NEFT system is owned and operated by the Reserve Bank of India (RBI) to facilitate the interbank transfer of funds electronically. With NEFT in place, you can remit funds to the account of a beneficiary almost in real-time.

NEFT Full Form: NEFT stands for National Electronic Funds Transfer

NEFT Full form stands for National Electronic Funds Transfer. The system was introduced in November 2005, and it is owned and operated by the Reserve Bank of India (RBI).

NEFT enables banks to transfer funds electronically from one bank to another. It allows banks to exchange information on transactions between them, so that settlement can be completed between them with reduced risk of settlement failure, arising out of un-cleared payment instructions.

The system was originally known as National Electronic Clearing System (NECS).

NEFT Full Form

NEFT Full form : The concept behind NEFT

When we discuss NEFT Full form, we need to understand the concept behind NEFT. As mentioned, NEFT uses an online system that allows you to make transfers between banks. A customer has to register on an NEFT enabled bank with their account details, including IFSC code and bank account number.

When funds are transferred, they are credited directly into your bank account within minutes of making such a request through online banking. Normally, you can expect the beneficiary account to be credited within two hours of the batch in which the transaction was processed.

However, if it is not possible to afford credit to the account of the beneficiary for any reason, the destination bank is required to return the amount to the originating branch within two hours of completion of the batch settlement.

These transactions can be scheduled as well as unscheduled. Scheduled means that once you set up a transfer request at a particular time of day and date, it gets processed automatically at that time without any intervention from you or your banker.

NEFT is currently available for customers having accounts almost all over the locations in India through Internet Banking 24x7x365 across all banks, covering rural areas also where normal banking services may not be accessible.

NEFT: How it works

It is a method used to transfer funds from one bank account to another. Customers can transfer funds from their accounts directly to other customers’ accounts using an IFSC code and the Account number of the beneficiary.

What is Indian Financial System Code (IFSC)?

IFSC or Indian Financial System Code is an 11-digit alpha-numeric code. The first 4 alpha characters represent the bank, and the last 6 characters represent the branch. The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating / destination banks/branches and also to route the messages appropriately to the concerned banks/branches.

Although NEFT transactions take place in batch mode on business days, most banks allow urgent transactions by entering into an agreement with other banks through a system called Urgent Funds Transfer or UFT. In some cases like recovery of money in a cheque bounce case, it may be done on non-business days also.

Following is the step-wise flow of NEFT transaction


  • You can use the NEFT internet/mobile banking facility to transfer funds.
  • Add a new beneficiary with your bank by furnishing details of the beneficiary such as the name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number, etc.
  • Authorize your bank debit your account for the amount to be transferred


  • Your bank then prepares a message and sends it to ithe bank’s pooling centre, also called the NEFT Service Centre.


  • The pooling centre forwards the message to the NEFT Clearing Centre, operated by the RBI
  • The Clearing center will include the message to be included for the next available batch.


  • The Clearing Centre sorts the funds transfer transactions beneficiary bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the beneficiary banks (credit).
  • Thereafter, bank-wise remittance messages are forwarded to the beneficiary banks through their pooling centre (NEFT Service Centre).


  • The beneficiary banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts

Usage fee for NEFT transactions

Up To Rs.10,000/- Amount Up To Rs.10,000/-
Up To Rs.10,000/- Rs.2.50 (Exclusive of GST)
Rs.10,000 and up to Rs.1,00,000/- Rs.5.00 (Exclusive of GST)
Rs.1,00,000/-and up to Rs.2,00,000/- Rs.15.00 (Exclusive of GST)
Rs.2,00,000/-and up to Rs. 25,00,000/- Rs.25.00 (Exclusive of GST)

Why NEFT is needed in India?

Before 2005, funds transfer between banks was mostly done using Cash /DD (Demand Draft). With a large number of transactions every day, there were lots of issues related to funds transportation and delivery. So RBI decided to create an electronic payment system that will remove or reduce cash transactions and can be tracked easily.

Also, it will remove the chances of theft. The new system would allow real-time transactions which means you can find out immediately if your bank has received a transaction request.

It allows you to also instantly cancel a fund transfer request as soon as you make one so that no transaction takes place. This will ensure more security over Cash Transactions where once money is given, it’s very difficult to stop it later.

Advantages of using NEFT over other modes of fund transfers

NEFT operates 24*7 and is an electronic-based transfer system as compared to RTGS which is a paper-based transfer system. NEFT is also comparatively more economical than other modes of fund transfers.

Fund transfers through NEFT can be made up to ₹1 lakh per transaction and ₹2 lakhs in a day if there are multiple beneficiaries involved, while there are no limits on net banking transactions.

In addition, NEFT ensures that transfers cannot be forged unlike funds transferred via checks or demand drafts which can be easily faked by any individual with proper knowledge of forging documents in a bank.

The advantages of NEFT can be summarized as follows:

  • 24-hours availability on all days of the year.
  • Secure and near-real-time funds transfer to the beneficiary account and settlement
  • The system covers the entire country through a wide network of branches of all types of banks.
  • The stakeholders get the confirmation to by SMS / e-mail on credit to the beneficiary account.
  • There is a provision for penal interest provision for delayed credit to the beneficiary
  • Banks use the NEFT system free of charges
  • Savings bank (SB) account customers can use the sytem free of charges
  • NEFT system is also used for other purposes including, payment of credit card dues to the card issuing banks, payment of loan EMI, inward foreign exchange remittances, etc.
  • The system also allows one-way funds transfers from India to Nepal.

Issues with using NEFT

The three main issues with NEFT are its slowness, high charges and foreign exchange restrictions.

It takes time to send money through NEFT because of multiple intermediaries involved in a transaction, delays at clearinghouses and last-mile connectivity issues.

Sending money through NEFT means you have to pay several charge fees along with interest on your balance at your bank. There is also some amount of liquidity risk associated with using such transactions as there is always a chance that when you request for fund transfer from one bank to another, there might not be sufficient funds available in your account or at the other ends.

Another limitation of the system is that you can not originate an NEFT transaction to draw/receive funds from another account. Because NEFT is a credit-push system and as such, transactions can be originated only by the payer/remitter/sender to pay / transfer/remit funds to the beneficiary.

Disputes and Remedial measures

In case of a dispute related to the transaction, you can approach the Grievance Redressal department of your bank. If the bank prolongs the response beyond 30 days of your complaint, you can take up the issue with the RBI under “The Reserve Bank-Integrated Ombudsman Scheme (RB-IOS, 2021)”, by visiting this link. Alternatively, you can forward the complaint to the following address:

The Centralised Receipt and Processing Centre
Reserve Bank of India
4th Floor, Sector 17, Chandigarh – 160 017

Who Can Avail NEFT System?

All account holders of any bank that is a member of the NEFT system can use this facility for remitting and receiving funds. This includes individuals, firms or companies

Is it necessary that you have a bank account to avail of this facility?

As a remitter of funds, you are not required to have a bank account. However, the beneficiary must have an account with a member bank branch. You can send the funds by depositing cash in an NEFT enabled bank branch by producing your identity certificate/card. However, you can transfer only up to Rs.50,000/-per transaction

How do I know that my bank or the beneficiary bank is a member of the NEFT system?

You can visit here and verify the details. Currently, there are 1,59,908 branches of 224 banking institutions that are eligible for using the NEFT system

Is there any limit on funds/amount to be remitted through the NEFT system?

RBI has not put any limit. However, individual banks may have imposed any limits as a security measure

Can I transfer funds to the account of my relative staying abroad?

The NEFT system covers only banks inside the country. However, the service is partially extended to Nepal. With that, a one-way transfer of funds from India to Nepal is possible currently

What are the operating hours of NEFT?

The NEFT facility is available round the clock on all days throughout the year

What are the essential requirements for using the NEFT system?

The following details are essential for using the NEFT system:
1. Beneficiary’s Name
2. Beneficiary’s Branch Name
3. Beneficiary’s Bank Name
4. Beneficiary’s Account Type
5. Beneficiary’s Account No.
6 Beneficiary’s Branch IFSC

What happens if I write the wrong account number of the beneficiary?

The credit is provided to the account number written/given by the remitter in his / her application/instruction. And the credit is released solely based on the account number. So, it is your sole responsibility to write the correct account number on the application form

What is the Help Desk / Contact point at the RBI?

The NEFT Help Desk (or Customer Facilitation Centre of RBI), Primary Data Centre (PDC), RBI, CBD Belapur, Navi Mumbai, Maharashtra- 410210.

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

You can do it within the provisions of the Foreign Exchange Management Act, 2000 (FEMA) and Wire Transfer Guidelines.

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Hope this article on NEFT full form will clarify most of your doubts related to the subject. The other explanation of the NEFT full form is the North Eastern Frontier Tract (now North-East Frontier Agency; India)

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