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NEFT Full-Form Name: NEFT Meaning
NEFT Full-Form refers to National Electronic Funds Transfer. NEFT is among the highly used systems of EFT or Electronic Funds Transfer in India. This facility was first introduced in the year 2005. This facility is provided by banks to their customers, which enable the customers to securely and easily transfer their funds on the one-to-one basis. The NEFT is performed through electronic messages. Unlike the RTGS or Real Time Gross Settlement, the NEFT does not work on the basis of real-time systems. The execution of the NEFT facility takes place in hourly batches, which results in the time lag. Nearly thirty thousand bank branches provide this facility throughout the nation and operate in the batch mode.
According to the RBI, the NEFT is a countrywide payment system and provides the facility of transferring funds. The corporations, firms, and individuals under this scheme can transfer funds electronically from the branch of a bank to a corporation, firm or individual, provided that the receiving party has an account in a nother branch of any bank and participates in the scheme. The NEFT has obtained popularity due to many reasons. Some of these reasons include the ease with which people can conclude the transactions and the short time it takes to complete them. As of the year 2008, forty-two per cent of the electronic fund transaction consisted of the NEFT transactions.
The first step involved in the NEFT process is the filling in an application form by the customer. He will need to provide the beneficiary details such as the beneficiary’s account number, IFSC code, bank name, branch name, type of account, and the remitting amount. The bank branch then receives authorization from the remitter for debiting the customers’ account and remitting the account specified by the customer to the beneficiary. This facility can also be available via online banking. Certain banks also offer this facility via the ATMs.
In the second step, the originating branch of the bank sends a message to its service centre of NEFT. This centre is also referred to as the pooling centre. In the third step, the message is forwarded by the pooling centre to the clearing centre of the NEFT. The RBI operates these clearing centres. The fourth step involves the sorting of the transactions (fund transfer) on the basis of banks. It also makes the accounting entries to debit the funds and credit them to the destination bank accounts. The remittance messages are then sent through the pooling centres to the destination bank accounts. In the last step, the remittance message is received by the destination bank from the clearance centre and credits the accounts of the beneficiary customers.
The operations of NEFT take place in hourly batches. There are around 12 settlements from eight in the morning to seven in the evening on the weekdays. On Saturdays, there are six settlements from eight in the morning to one in the afternoon. A transaction which starts after the settlement time is required to wait till the nest settlement time starts. All transactions that started before five in the evening are completed on the same day, as of the year 2013. There is no settlement of any transaction on public holidays and weekly holidays.
From 214 to 2015, over nine hundred NEFT transactions were made of the worth eight hundred and ninety billion dollars. During the previous year, over six hundred million transactions were made of worth six hundred and fifty billion dollars.