Indian Fintech Paytm Explains How National Electronic Funds Transfer Aims to Promote Digital Transactions


NEFT or National Electronics Funds Transfer is a facility provided (in India) by nearly all the local banking institutions.

As explained in a blog post by Fintech firm Paytm, NEFT is among the most preferred methods of making money transfers in India. Via NEFT, users are able to transfer funds through Internet or online banking from the comfort of their homes.

All the NEFT transfers and associated guidelines are determined by the Reserve Bank of India (RBI), which aims to ensure adequate safety and security of monetary transactions. If you’re  interested in taking advantage of the benefits provided by NEFT transfers, then you need to have a basic understanding of how NEFT actually works, how much in charges you’ll pay on these transactions and what the NEFT settlement time might be.

As noted by Paytm, NEFT services are currently available 24/7, including holidays. But these services are “settled in batches of half an hour,” the Fintech firm noted while adding that this means that NEFT transactions are “settled in 48 hourly batches, every day.”

As mentioned in a blog post by Paytm, the settlement of the first batch of NEFT transfers starts at  12:30 AM and ends at 12:00 AM. This is done “to enable the settlement of more transactions in order to reduce the NEFT settlement time; thereby making it more convenient for the users.”

The Fintech firm also mentioned that all NEFT transfers that take place at the normal bank working hours are “considered to be automated transactions that are initiated through ‘Straight Through Processing’ (STP) modes by the banks.”

Commenting on when clients are able to make NEFT transfers, the company noted that since all such transactions are carried out under the guidance of RBI, the “timings and process of NEFT transactions is all under the RBI’s purview.”

Prior to December 2019, RBI had set up fixed timings during which NEFT transfers would be handled. Any NEFT transfer could be “processed only between 8:00 AM and 6:30 PM from Monday to Friday, and 8:00 AM to 12:00 PM on Saturdays.”

But starting from last year, NEFT transfers may be conducted 24/7. This was done “to promote digital transactions and global integration of financial markets.”

The Paytm team further explains that NEFT uses a fairly simple mechanism to “perform the transfer of funds from one bank account to another.”

Going on to address a question about how to make transactions via NEFT, the Fintech company noted that the transfer of funds via NEFT is “simple and convenient” and that all you have to do is  follow these steps:

  • Log in to the your internet banking account
  • On the main page, click on ‘Fund transfer’
  • From the drop down menu that appears, select ‘NEFT’
  • Note that you need to ‘Add beneficiary’ to the list of beneficiaries in your account if you haven’t done so already
  • To add a new beneficiary, you need to click on ‘Add beneficiary’ option on the page
  • Enter the beneficiary’s required information such as his/her name, bank account number, IFSC, etc.
  • Click on ‘Confirm’ or ‘Add’
  • To authenticate this step, you will be asked to enter the OTP sent to your registered mobile number
  • After doing so, your action would be processed. It will take around 24 hours to add a beneficiary
  • Once the beneficiary is added to your account, you need to select the beneficiary details (to whom you need to send the money) from your list of beneficiaries
  • Enter the amount that needs to be transferred and confirm your transaction
  • Click on ‘Confirm’ and the amount will be transferred from your bank account to the other’s

Commenting on how much the charges are that are applicable on NEFT Transactions, the company noted that until December 2021, these types of transfer actions involve certain additional charges (relatively low compared to international standards) as a money transfer fee.

However, the RBI will be removing all the applicable charges on online NEFT transfers. This initiative was taken to “promote digital transactions,” the Paytm team noted while adding that the RBI stated that no banks (in the future) “shall levy any charges from their savings account holders on online fund transfers done through NEFT (National Electronic Funds Transfer) system.”

As explained by Paytm, NEFT has become one of the most preferred modes of fund transfer because:

  • One of the major benefits is that “there is no minimum or maximum NEFT amount transfer limit”;
  • Users can “transfer as low as Re.1 through NEFT”;
  • You can “transfer money through NEFT online; without the involvement of cheques or demand drafts or without having to visit the bank”;
  • RBI has “laid such guidelines that allows the sender and receiver to stay updated about the fund transfer through notifications via SMS and/or email”;
  • Funds through NEFT “can be transferred between 1 hour and 24 hours”;
  • Since NEFT transactions “are governed by the RBI, there is no doubt on the safety of these transactions.”


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