NEFT (National Electronic Funds Transfer)
National Electronic Funds Transfer (NEFT) is an RBI-operated nationwide interbank payment system that settles fund transfers in half-hourly batches on a 24×7 basis since December 2019, with no upper transaction limit and minimal charges, making it suitable for high-value retail and corporate payments.
NEFT was operationalised by the RBI in November 2005, replacing the earlier Electronic Funds Transfer (EFT) system. It operates on a deferred net settlement (DNS) mechanism, where payment instructions received during a batch window are consolidated, netted, and settled at the end of the batch — a fundamentally different architecture from the real-time gross settlement of RTGS or the real-time processing of IMPS and UPI.
Each NEFT batch settlement involves: the originating bank sends a funds transfer message to the NEFT Service Centre; messages are sorted and consolidated; at settlement, the net position of each bank is calculated and settled through their current accounts maintained with the RBI; and the beneficiary bank credits the beneficiary's account after receiving the settlement confirmation. The end-to-end timeline from initiation to credit was typically same-day for transactions within business hours, but could extend to the next working day for transactions submitted near the cut-off.
The RBI moved NEFT to 24×7 operations in December 2019 — a significant expansion from the earlier Monday-to-Saturday settlement window (excluding bank holidays). Batches now settle every 30 minutes around the clock, including Sundays and bank holidays. For transactions initiated in the night or early morning hours, credits are typically posted in the first or second batch of the business day.
There is no minimum or maximum transaction limit for NEFT, distinguishing it from RTGS (Rs 2 lakh minimum). Charges for NEFT transactions were made free for savings account holders in January 2020 following an RBI directive, making it a zero-cost option for individuals. Corporate accounts continue to pay minimal fees.
NEFT is widely used for salary disbursements, vendor payments, EMI and loan repayments, utility bill payments, and tax remittances. Its no-upper-limit feature makes it popular for property transactions, large vendor settlements, and dividend disbursements by corporates — use cases where RTGS is an alternative but NEFT provides sufficient finality assurance for non-time-critical amounts.
NEFT volume trends — published monthly by the RBI — are a proxy for formal financial system activity and corporate payment behaviour. For banks, NEFT facilitates fee income through corporate transaction banking relationships and contributes to current account balances through float.