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BankersAdda:BANKINGCONCEPTS:THENEFTSYSTEM

BANKINGCONCEPTS:THENEFTSYSTEM
Q.1.WhatisNEFT?
Ans:NationalElectronicFundsTransfer(NEFT)isanationwidepayment
systemfacilitatingonetoonefundstransfer.UnderthisScheme,
individuals,firmsandcorporatescanelectronicallytransferfundsfromany
bankbranchtoanyindividual,firmorcorporatehavinganaccountwithany
otherbankbranchinthecountryparticipatingintheScheme.
Q.2.AreallbankbranchesinthecountrypartoftheNEFTfundstransfer
network?
Ans:ForbeingpartoftheNEFTfundstransfernetwork,abankbranchhasto
beNEFTenabled.
Q.3.WhocantransferfundsusingNEFT?
Ans:Individuals,firmsorcorporatesmaintainingaccountswithabank
branchcantransferfundsusingNEFT.Evensuchindividualswhodonot
haveabankaccount(walkincustomers)canalsodepositcashattheNEFT
enabledbrancheswithinstructionstotransferfundsusingNEFT.However,
suchcashremittanceswillberestrictedtoamaximumofRs.50,000/per
transaction.Suchcustomershavetofurnishfulldetailsincludingcomplete
address,telephonenumber,etc.NEFT,thus,facilitatesoriginatorsor
remitterstoinitiatefundstransfertransactionsevenwithouthavingabank
account.
Q.4.WhocanreceivefundsthroughtheNEFTsystem?
Ans:Individuals,firmsorcorporatesmaintainingaccountswithabank
branchcanreceivefundsthroughtheNEFTsystem.Itis,therefore,
necessaryforthebeneficiarytohaveanaccountwiththeNEFTenabled
destinationbankbranchinthecountry.
TheNEFTsystemalsofacilitatesonewaycrossbordertransferoffunds
fromIndiatoNepal.ThisisknownastheIndoNepalRemittanceFacility
Scheme.AremittercantransferfundsfromanyoftheNEFTenabled
branchesintoNepal,irrespectiveofwhetherthebeneficiaryinNepal
maintainsanaccountwithabankbranchinNepalornot.Thebeneficiary
wouldreceivefundsinNepaleseRupees.
Q.5.IsthereanylimitontheamountthatcouldbetransferredusingNEFT?
Ans:No.Thereisnolimiteitherminimumormaximumontheamountof
fundsthatcouldbetransferredusingNEFT.However,maximumamountper
transactionislimitedtoRs.50,000/forcashbasedremittancesand
remittancestoNepal.
Q.6.Whetherthesystemiscentrespecificorhasanygeographical
restriction?
Ans:No.Thereisnorestrictionofcentresorofanygeographicalareawithin
thecountry.TheNEFTsystemtakesadvantageofthecorebankingsystem
inbanks.Accordingly,thesettlementoffundsbetweenoriginatingand
receivingbankstakesplacescentrallyatMumbai,whereasthebranches
participatinginNEFTcanbelocatedanywhereacrossthelengthandbreadth
ofthecountry.
Q.7.WhataretheoperatinghoursofNEFT?
Ans:Presently,NEFToperatesinhourlybatchesthereareeleven
settlementsfrom9amto7pmonweekdays(MondaythroughFriday)and
fivesettlementsfrom9amto1pmonSaturdays.
Q.8.HowdoestheNEFTsystemoperate?
Step1:Anindividual/firm/corporateintendingtooriginatetransferof
fundsthroughNEFThastofillanapplicationformprovidingdetailsofthe
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beneficiary(likenameofthebeneficiary,nameofthebankbranchwherethe
beneficiaryhasanaccount,IFSCofthebeneficiarybankbranch,account
typeandaccountnumber)andtheamounttoberemitted.Theapplication
formwillbeavailableattheoriginatingbankbranch.Theremitterauthorizes
his/herbankbranchtodebithisaccountandremitthespecifiedamountto
thebeneficiary.Customersenjoyingnetbankingfacilityofferedbytheir
bankerscanalsoinitiatethefundstransferrequestonline.Somebanksoffer
theNEFTfacilityeventhroughtheATMs.Walkincustomerswill,however,
havetogivetheircontactdetails(completeaddressandtelephonenumber,
etc.)tothebranch.Thiswillhelpthebranchtorefundthemoneytothe
customerincasecreditcouldnotbeaffordedtothebeneficiarysbank
accountorthetransactionisrejected/returnedforanyreason.
Step2:Theoriginatingbankbranchpreparesamessageandsendsthe
messagetoitspoolingcentre(alsocalledtheNEFTServiceCentre).
Step3:ThepoolingcentreforwardsthemessagetotheNEFTClearing
Centre(operatedbyNationalClearingCell,ReserveBankofIndia,Mumbai)
tobeincludedforthenextavailablebatch.
Step4:TheClearingCentresortsthefundstransfertransactionsdestination
bankwiseandpreparesaccountingentriestoreceivefundsfromthe
originatingbanks(debit)andgivethefundstothedestinationbanks(credit).
Thereafter,bankwiseremittancemessagesareforwardedtothedestination
banksthroughtheirpoolingcentre(NEFTServiceCentre).
Step5:Thedestinationbanksreceivetheinwardremittancemessagesfrom
theClearingCentreandpassonthecredittothebeneficiarycustomers
accounts.
Q.9.WhatisIFSC?
Ans:IFSCorIndianFinancialSystemCodeisanalphanumericcodethat
uniquelyidentifiesabankbranchparticipatingintheNEFTsystem.Thisisan
11digitcodewiththefirst4alphacharactersrepresentingthebank,andthe
last6charactersrepresentingthebranch.The5thcharacteris0(zero).IFSC
isusedbytheNEFTsystemtoidentifytheoriginating/destinationbanks/
branchesandalsotoroutethemessagesappropriatelytotheconcerned
banks/branches.
Q.10.WhataretheprocessingorservicechargesforNEFTtransactions?
Ans:ThestructureofchargesthatcanbeleviedonthecustomerforNEFTis
givenbelow:
a)Inwardtransactionsatdestinationbankbranches(forcredittobeneficiary
accounts)
Free,nochargestobeleviedfrombeneficiaries
b)Outwardtransactionsatoriginatingbankbranches(chargesforthe
remitter)
FortransactionsuptoRs1lakhnotexceedingRs5(+ServiceTax)
FortransactionsaboveRs1lakhanduptoRs2lakhsnotexceedingRs
15(+ServiceTax)
FortransactionsaboveRs2lakhsnotexceedingRs25(+ServiceTax)
c)ChargesapplicablefortransferringfundsfromIndiatoNepalusingthe
NEFTsystem(undertheIndoNepalRemittanceFacilityScheme).
Witheffectfrom1stJuly2011,originatingbanksarerequiredtopaya
nominalchargeof25paiseeachpertransactiontotheclearinghouseaswell
asdestinationbankasservicecharge.However,thesechargescannotbe
passedontothecustomersbythebanks.
Q.11.CanremittancesbesentabroadusingNEFT?
Ans:No.However,afacilityisavailabletosendoutwardremittancesto
NepalundertheIndoNepalRemittanceFacilityScheme.
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Q.12.WhataretheothertransactionsthatcouldbeinitiatedusingNEFT?
Ans:Besidespersonalfundstransfer,theNEFTsystemcanalsobeusedfor
avarietyoftransactionincludingpaymentofcreditcardduestothecard
issuingbanks.ItisnecessarytoquotetheIFSCofthebeneficiarycard
issuingbanktoinitiatethebillpaymenttransactionsusingNEFT.
Q.13.Canatransactionbeoriginatedtodraw(receive)fundsfromanother
account?
Ans:No.NEFTisacreditpushsystemi.e.,transactionscanbeoriginated
onlytotransfer/remitfundstoabeneficiary.
Q.14.WhatarethebenefitsofusingNEFT?
Ans:NEFToffersmanyadvantagesovertheothermodesoffundstransfer:
TheremitterneednotsendthephysicalchequeorDemandDrafttothe
beneficiary.
Thebeneficiaryneednotvisithis/herbankfordepositingthepaper
instruments.
Thebeneficiaryneednotbeapprehensiveofloss/theftofphysical
instrumentsorthelikelihoodoffraudulentencashmentthereof.
Costeffective.
CreditconfirmationoftheremittancessentbySMSoremail.
Remittercaninitiatetheremittancesfromhishome/placeofworkusing
theinternetbankingalso.
Nearrealtimetransferofthefundstothebeneficiaryaccountinasecure
manner.

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