Full Form of NEFT

Full-Form of NEFT (National Electronic Fund Transfer)

The full form of NEFT is National Electronic Fund Transfer, and it is an online system for transferring funds from one account in one bank to another account in another bank. It was started in 2005; it was made mandatory for all banks on SEFT (Special Economic Fund Transfer system) migrate to the NEFT system. NEFT system operates on Deferred Net Settlement. Transfer of Fund Transactions is processed in batches instead of continuous individual settlement, which happens in RTGS (Real Time Gross Settlement).

NEFT works on Public Key Infrastructure (PKI) to make a sure end to end security and Indian Financial Network (INFINET) to connect bank branches for electronic fund transfer.


Banking system success highly depends on development in fields of information technology and communication. Electronic transfer mode is now a secure, safe, and easy way to transfer money. In electronic transfer, the amount is deducted from an account and credited to another account in a matter of moments, which helps in time-saving, and no efforts in the actual physical transfer. There are two systems for electronic fund transfer in India: NEFT and RTGS mainly maintained by the Reserve bank of India.

Full Form of NEFT

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Importance of NEFT

  • The process entirely depends on electronic fund transfer against physical fund transfer, which takes time and much more effort.
  • Processing charges applicable in NEFT transactions are very less.
  • NEFT method is highly dependable for making payments or receiving funds online since banks have to follow RBI norms.
  • Time-saving: Unlike other payment methods, NEFT helps in quick settlements in accounts, which helps in efficiency for individuals as well as for many businesses.

Pre-Requisites of Using NEFT

A most important requirement for using NEFT is a bank account and active internet banking facility in your account. An Individual or business intends to transfer funds through NEFT to fill the beneficiary’s detail in the application form.

The application form mainly consists of the following details: –

  • Account Name: individual/business name as registered in their bank.
  • Bank Name: Name of Bank (For inter-bank transfer)
  • Bank Branch: City and area in which the Bank branch is located.
  • IFSC Code: Indian Financial System Code is an alphanumeric code assigned to every bank of every bank required for online fund transfer.
  • Account Type.
  • Account Number of Beneficiary.


Process of NEFT

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  • Remitter authorizes the bank branch to debit the amount from his account and credit it in the beneficiary’s account.
  • The message is sent to the pooling center (NEFT Service Centre) from the bank of remitter.
  • The message is forwarded by the pooling center to the NEFT Clearing center (maintained by National Clearing Cell, RBI) to make transfer available in the next batch.
  • Clearing Centre adjusts fund transfer as per every bank make necessary accounting entries into its system, and match it with banks accounting entries, i.e., receive fund from remitter bank and transfer to the destination bank.
  • The message is sent to banks involved in this transaction from the pooling center.
  • A beneficiary bank receives the amount and credits it to a beneficiary account.
  • An alternate method is available for individuals or businesses who do not have an account with the bank through cash deposits in the bank and filling an application form for NEFT transactions.
  • To avoid cases of money laundering, it is important for banks to validate beneficiary.

NEFT Timing

Transactions TimingsNEFT
Monday to Thursday8.00 AM to 7.30 PM
Friday to Saturday8.00 AM to 1.00 PM
All SundayClosed

NEFT transactions are settled in 11 batches from 8 A.M. to 7 P.M. from Monday to Friday and in 6 batches on Saturday 8 A.M. to 1 P.M. (not on second and fourth Saturday). No transaction is settled on Sunday and bank holidays. Transactions made after 7 P.M. are settled on the next working days. The individual can make transactions after working hours or on holidays, but they will be settled on the next working day.

NEFT Limits

NEFT transfer minimum limit available is ₹ 1. There is no maximum limit assign to NEFT transactions from RBI. However, every bank can set a limit for NEFT transactions for e.g., ICICI bank has a maximum limit of up to ₹10 lakhs. The Cash Transaction limit is set maximum up to ₹ 50000 for each transaction, but there is no limit on the transfer of the total amount.

NEFT Charges

Transfer AmountCharges
₹ 1 to ₹10,000Should Not Be Above ₹2.50 + GST
Above ₹10,000 to ₹1,00,000Should Not Be Above ₹5 + GST
Above ₹1,00,000 and up to ₹2,00,000Should Not Be Above ₹15 + GST
Above ₹2,00,000Should Not Be Above ₹25 + GST

GST applicable shown on the table above is calculated on charges. For e.g., If you made the transfer through NEFT of 15,000, then charges applicable are ₹ 5 plus 18 % GST on ₹ 5, i.e., ₹ 0.9 (90 paise). Therefore total charges applicable to this transfer are ₹ 5 + ₹ 0.9 = ₹ 5.9.

Comparison of other Alternatives for Transfer of Fund

Minimum Transfer Value₹ 1₹ 2,00,000₹ 1
Maximum Transfer ValueNo Upper LimitNo Upper Limit₹ 2,00,000
Mode of TransferOnline and OfflineOnline and OfflineOnline
Settlement BasisHourlyReal TimeReal Time
Timing8 A.M to 7 P.M
on Working Days
(not on 2nd and 4th
Saturday or holidays)
8 A.M to 6 P.M on
Working Days
24*7 availability


  • Development in Information technology and infrastructure are key components for Modern Banking services. For any customer, important factors that create value are quality of service, trust followed by technology, location, and type of bank.
  • Facilities like NEFT, RTGS, and IMPS provides customer comfort of easy, simple and time-saving way to transfer amount from one account to other, including interbank transfer increasing transparency in the process and helpful for individual and business to settle payments.
  • Challenges in front of RBI are making the availability of 24/7 to all customers; reduce paper-based payments, monitoring transactions to prevent money laundering.
  • Reserve Bank of India decided to start Central Payment Fraud Registry. RBI’s Payment system vision 2021 has the primary object of ‘ Empowering exceptional (E)Payment experience’ to make sure every Indian will have a payment system that is safe, secure, convenient, quick, and affordable.
  • RBI continuously collects data on fraud in online payment systems to form a detailed framework. Even with given challenges with proper education and awareness in people, electronic fund transfer systems like NEFT will help in growth, transparency, business structureBusiness StructureBusiness structure is the legal framework adopted by a company to execute business activities in compliance with the corporate rules and regulations. An organization can be a sole proprietorship, partnership, limited liability company or corporation.read more in India.

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This has been a guide to the Full Form of NEFT, i.e. (National Electronic Fund Transfer) and its definition. Here we discuss the Pre-requisites of using NEFT, the importance, process, and timing of national electronic fund transfer along with its limits and charges. You may refer to the following articles to learn more about finance –

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