NEFT, short for National Electronic Funds Transfer, is India’s bank-to-bank money transfer system run by the Reserve Bank of India. It moves funds between accounts in scheduled half-hourly batches rather than instantly, operating 24 hours a day, every day of the year. The RBI processes 48 settlement batches in each 24-hour cycle, with the first clearing after 00:30 and the last at 00:00.1Reserve Bank of India. NEFT 24×7 Availability Notification The system operates under the Payment and Settlement Systems Act of 2007, which gives the RBI authority over all payment systems in the country.2India Code. The Payment and Settlement Systems Act, 2007 Round-the-clock availability has been in place since December 16, 2019; before that, NEFT ran only during banking hours on working days.
How the Batch Settlement Works
NEFT uses a process called Deferred Net Settlement. Your transfer instruction doesn’t shoot straight to the recipient’s bank. It joins a queue, waits for the next batch window, and gets bundled with thousands of other instructions from across the banking system. At each half-hour mark, the RBI’s clearing house tallies up what every bank owes every other bank, nets those amounts down to a single figure per bank pair, and moves the money accordingly.
The upside is efficiency: netting dramatically reduces the actual funds that need to change hands between institutions, which is how the system handles enormous volume without strain. The downside is lag. A transfer you submit at 10:05 won’t begin processing until the 10:30 batch.
When the Money Reaches the Beneficiary
Once your batch settles, the receiving bank has two hours to credit the beneficiary’s account or return the funds to the sending bank.3Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System Most credits land well inside that window, and both sender and receiver typically get SMS or email confirmations when the transaction completes.
If the bank misses the two-hour deadline, it owes the affected customer penalty interest at the RBI’s current repo rate plus two percent, calculated for the full period of delay. This payment is meant to happen automatically. You should not have to file a separate claim to receive it.3Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System
How Much You Can Send
The RBI sets no minimum and no maximum transfer amount for NEFT.3Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System You can move one rupee or one crore through the same channel.
Individual banks, however, impose their own daily caps based on internal risk policies approved by their boards. A retail internet banking user at one bank might face a ₹10 lakh daily ceiling while another sets the limit at ₹25 lakh. Check your bank’s own policy before assuming a large payment will clear.
People without a bank account can still use NEFT by walking into any participating branch and depositing cash. These walk-in remittances are capped at ₹50,000 per transaction.3Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System
What It Costs
If you initiate NEFT online through internet banking or a mobile app and hold a savings account, your bank cannot charge you a fee. The RBI mandated this zero-charge policy effective January 1, 2020, to encourage digital payment adoption.4Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System – Section: 12. What are the customer charges levied by bank for NEFT transactions?
Transfers initiated at a bank branch carry regulated maximum fees, which banks may charge in full or set lower:
- Up to ₹10,000: not more than ₹2.50 plus GST
- ₹10,001 to ₹1 lakh: not more than ₹5 plus GST
- ₹1 lakh to ₹2 lakh: not more than ₹15 plus GST
- Above ₹2 lakh: not more than ₹25 plus GST
GST on financial services runs at 18%.5Central Board of Indirect Taxes and Customs. GST Goods and Services Rates So a ₹3 lakh branch transfer at the maximum fee costs ₹29.50 all in: ₹25 plus ₹4.50 GST.
What You Need to Start a Transfer
Getting any of these details wrong usually means the transfer bounces back, or worse, lands in the wrong account. Verify each one before you submit.
- The beneficiary’s full name, exactly as it appears on their bank records.
- Their bank account number. NEFT routes credits entirely by account number, not by name, so an incorrect number is the most consequential error you can make.
- The IFSC (Indian Financial System Code), an 11-character alphanumeric code unique to each bank branch. The first four characters identify the bank, the fifth is always zero, and the last six identify the specific branch. It appears on cheque leaves, in passbooks, and on the bank’s website.
- The account type: savings, current, or cash credit. Choosing the wrong type can cause a rejection.
Through internet banking or a mobile app, log in and go to the funds transfer section. You first add the recipient as a beneficiary using the details above. Most banks then enforce a cooling period, commonly 30 minutes to a few hours, during which only a small amount can be sent to that new beneficiary.6HDFC Bank. Cooling Period This delay is a fraud control: if someone had hijacked your login and added a payee, the cap limits how much they can drain before you notice. After the cooling window closes, enter the amount, pick NEFT, and authenticate with the OTP sent to your registered mobile. Keep that number current with your bank. No OTP means no transfer.
For branch transfers, fill out the NEFT form with the same beneficiary details. Staff submits the instruction and it enters the next available batch.
NEFT Compared to RTGS, IMPS, and UPI
NEFT is one of four main electronic payment channels in India. Choosing the right one depends on amount and urgency.
- RTGS (Real Time Gross Settlement) settles each transaction individually and instantly. The minimum is ₹2 lakh with no upper limit, which makes it the standard for large business payments.7Reserve Bank of India. FAQs – Real Time Gross Settlement (RTGS) System
- IMPS (Immediate Payment Service) settles instantly, runs 24/7, and generally caps transactions at ₹5 lakh.
- UPI (Unified Payments Interface) runs on IMPS infrastructure and processes instant transfers using a phone number or virtual payment address instead of account details. The standard daily limit is ₹1 lakh, though categories such as tax and medical payments allow up to ₹5 lakh.
NEFT sits in the middle: no minimum, no RBI-imposed maximum, free online, but settlement waits for the next batch. If you need the money to land in seconds, pick IMPS or UPI. For larger sums where a wait of up to a couple of hours is fine, NEFT does the job at no cost for savings account holders using online banking.
If Money Goes to the Wrong Account
NEFT is unforgiving about typos. Because the system routes credits only by account number, an incorrect number that happens to be valid at the destination bank will deliver your money to a stranger, and the system considers the transaction complete.3Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System
If this happens, contact your bank’s grievance redressal cell straight away with the transaction reference number. If the bank doesn’t resolve the complaint within 30 days, you can escalate to the Reserve Bank’s Integrated Ombudsman Scheme (RB-IOS 2021). Complaints can be filed online at cms.rbi.org.in, by email, by post to the Centralised Receipt and Processing Centre in Chandigarh, or by phone at the toll-free number 14448 during business hours.3Reserve Bank of India. FAQs – National Electronic Funds Transfer (NEFT) System
There is no automatic reversal. Getting the funds back depends on the cooperation of the unintended recipient and their bank. The practical defense is to verify the account number before sending, especially the first time you pay someone new.