Reserve Bank of India has introduced an electronic funds transfer system called "National Electronic Funds Transfer” System to relieve the stress on the existing paper based funds transfer and clearing system. The objective of the NEFT System is to establish an electronic funds transfer system to facilitate an efficient, secure, economical, reliable and expeditious system of funds transfer and clearing in the banking sector facilitating one-to-one funds transfer, from any bank branch to an account with any other bank branch in the country participating in the NEFT network, either on the same day or the next working day. Even individuals who do not have a bank account ('walk-in-customers') can deposit cash, up to a certain limit, at the NEFT-enabled branches with instructions to transfer funds using NEFT.NEFT refers to any transfer of funds initiated through an electronic terminal, including credit card, ATM, RBI and point-of-sale (POS) transactions. It is used for both credit transfers, such as payroll payments, and for debit transfers, such as Housing loan or Vehicle loan payments.
An Application Form authorising the sending bank to debit the sender's account and transfer funds to the in pbeneficiary as specified in the Model NEFT Application Form. The application could be submitted either hysical form or electronically with the following particulars:
Beneficiary's Name :bank customer (i.e. sender or originator) desirous of remitting funds
Beneficiary's Branch Name :
Beneficiary's Bank Name :
Beneficiary's Account Type :
Beneficiary's Account No. :
Beneficiary's Branch IFSC :
After consolidating all NEFT messages received from originating banks, the NEFT Clearing Centre shall process the data, arrive at fund settlement, send the fund file to Deposit Accounts Department (DAD), RBI for settlement and after settlement is over, send beneficiaries' details / data to each beneficiary bank for affording credit to the beneficiaries' accounts. Banks which have no transactions will get a batch wise 'nil' transactions report and a summary report at the end of the day indicating all inward transactions received by them during the day.
Transactions are processed by the bank through the Automated network, the secure transfer system that connects all U.S. financial institutions. For payments, funds are transferred electronically from one bank account to the billing company's bank, usually less than a day after the scheduled payment date.
The growing popularity of NEFT for online bill payment is paving the way for a paperless universe where checks, stamps, envelopes, and paper bills are obsolete. The benefits of NEFT include reduced administrative costs, increased efficiency, simplified bookkeeping, and greater security. However, the number of companies who send and receive bills through the Internet is still relatively small.
Reserve Bank of India is responsible for implementation, administration and supervision of the NEFT System governs financial transactions with electronic payment services, specifically with regard to disclosure of information, consumer liability, error resolution, record retention, and receipts at electronic terminals.