The Reserve Bank of India has decided to reduce clearance time for online money transfers using the NEFT (National Electronic Funds Transfer) mechanism by increasing the settlement frequency to every half-an-hour, from the existing one hour. The RBI, from July 10, will add 11 settlement batches per day to the NEFT system, taking the total to 23.
At present, the NEFT money transfers from one bank account to another are processed in 12 hourly batches between 8 am and 7 pm, Monday-Saturday (except 2nd and 4th Saturdays). All online money transfer requests submitted before the cut-off time are processed in the very next settlement batch. The introduction of new settlement batches will make online money transfers faster and will also reduce the load in each batch. “The half hourly settlements would speed up the funds transfer process and provide faster credit to the destination accounts,” the RBI said in a notification.
The overall NEFT timings will remain the same as earlier — 8 am to 7 pm. Most banks keep the cut-off time at 6.30 pm for submitting the requests for processing in the last batch.
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The RBI has not imposed any limit on the amount of money that can be transferred using NEFT, but individual banks usually set a limit, advising customers to use another mechanism — RTGS (Real-Time Gross Settlement) — for online transfer of large sums of money. As the name suggests, in RTGS, the settlement happens on a real-time basis.
RBI has asked banks to upgrade their processing systems to meet the requirement of initiating NEFT transactions for half-hourly settlement intervals. It has also asked the banks to credit the inward NEFT transaction every half-an-hour.
Under the NEFT system, upon receiving the fund transfer request from the customer, the bank branch sends a message to its pooling centre, which forwards it to RBI’s NEFT clearing centre, which then sorts and sends messages to the beneficiary banks to credit the amount in each of the account.
If the beneficiary bank, for some reason, is unable to credit the beneficiary account, it is required to remit the amount back to the originating bank within two hours of the original processing batch.