How does the NEFT system operate?
by Admin
Posted on Jul 25, 2020
Here is the step by step process of how the NEFT works?
Step-1: An individual/firm/corporate can use the internet/mobile banking facility offered by his/her bank for initiating online funds transfer request.
Step-2: The remitter needs to provide details of beneficiary such as, name of the beneficiary, name of the bank branch where the beneficiary has an account, IFSC of the beneficiary bank branch, account type and account number, etc.
Step-3: After successful adding beneficiary, the remitter can initiate online NEFT funds transfer by through their internet/mobile banking.
Step-4: The originating bank prepares a message and sends the message to its pooling centre, also called the NEFT Service Centre.
Step-5: The pooling centre forwards the message to the NEFT Clearing Centre, operated by the RBI, to be included for the next available batch.
Step-6: The Clearing Centre sorts the funds transfer transactions beneficiary bank-wise and prepares accounting entries to receive funds from the originating banks (debit) and give the funds to the beneficiary banks (credit). Thereafter, bank-wise remittance messages are forwarded to the beneficiary banks through their pooling centre (NEFT Service Centre).
Step-7: The beneficiary banks receive the inward remittance messages from the Clearing Centre and pass on the credit to the beneficiary customers’ accounts.