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How Does The NEFT Fund Transfer System Work?


The National Electronic Funds Transfer Fund (NEFT) transfer mechanism has today become one of the most popular way of remitting money across the country.


In fact, it is cheap, fast and easily available across the country. It takes around 30 to 45 minutes to complete the transfer of funds.

How does the NEFT work?

While transferring money, the remitter needs to provide accurate details of beneficiary such as, 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.

For a hassle free fund transfer, providing the correct details are a must. Initially, you have to add a new beneficiary to your list of beneficiaries and most banks thereafter allow a fund transfer after a period of 30 minutes.

How Does The NEFT Fund Transfer System Work?

While you can add the beneficiary details yourself, you can also visit the branch and add the beneficiary details. However, this can be a cumbersome process.

Once you have initiated the funds transfer, the originating bank prepares a message and sends the message to its pooling centre, also called the National Electronic Funds Transfer Service Centre.


The pooling centre forwards the message to the National Electronic Funds Transfer Clearing Centre, operated by the Reserve Bank of India, 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.

What happens if there is no credit?

In case, there is no credit to the beneficiary, the bank would return your money. That is extremely rare, if the details of the beneficiary has been correct. In case the money is not returned, it is advisable to contact your branch.

These days the National Electronic Funds Transfer is available 24x7, including bank holidays. So, you need not wait for any particular time and can remit money round the clock. The Reserve Bank of India to facilitate funds transfer does not charge banks and banks in turn are not charging customers.

For remitters, it's important to get the IFSC code and the bank account right. Do cross check a few times, before initiating a funds transfer.

Read more about: neft
Story first published: Tuesday, November 3, 2020, 10:30 [IST]
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