Thursday, May 11, 2017

NEFT is almost Real Time now-11 Benefits of NEFT

            Come July 10, 2017 and a new era will commence in India’s ePayment system. Buoyed by the increase of volumes in NEFT, Reserve Bank of India has introduced additional NEFT settlement batches

In NEFT, the funds transfer happen in batches as compared to real-time in RTGS or as the full form suggests Real Time Gross Settlement.

Under NEFT, settlement takes place with all transactions received till the Particular cut-off time in a particular batch.

After the introduction of 11 additional NEFT settlements, the total number will increase to 23 at half hourly settlement batches during the day. Currently there are twelve settlements from 8 am to 7 pm at hourly intervals. 

The overall NEFT timings - between 8.00 am and 7.00 pm - will remain the same as earlier.

The more number of settlement batches means that the fund transfer will happen at a quicker pace. This will improve the efficiency and add to customer convenience, the RBI said. However, the timings that the banks follow may vary depending on the customer timings of the bank branches.

The minimum amount which can be remitted through NEFT is INR 1. The maximum amount is restricted to the amount available in the originators bank account.

Through the additional 11 batches, the transfer is almost instantaneous.

"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 RBI has advised banks to carry out the required changes in their processing system to initiate the NEFT transactions for half hourly settlements. They have also been told to accept and credit the inward NEFT transactions on half hourly basis. Customers will also get a confirmation SMS once the transaction is completed.

NEFT online fund transfer to get faster from July 10 as settlement frequency doubles

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.

Customers having savings or current account are eligible to avail NEFT/ RTGS service. Individuals who do not have a bank account can also deposit cash at the NEFT-enabled branches. However, such cash remittances will be restricted to a particular amount per transaction.

11 Benefits of NEFT to Corporates   

 Benefit NO 01:: Access to customers of 183 + Banks

Benefit NO 02:: Access to customers spread over the length and width of India via 1,37,000+ Bank Branches

Benefit NO 03:: Special facility to receive Credit Card dues. In case of payments towards Credit Card dues, customers have to key in the 16 Digit Credit Card Number as the Beneficiary's account number, the Beneficiary's account type as 52 and the beneficiary bank's IFSC will be the IFSC of the branch responsible for handing these card bill payments.

The card issuing banks have to designate a branch for accepting such payments and communicate the IFSC of the designated branch to their credit card customers.

Through this facility the card holders can plan the payment date of their credit card dues.  They can schedule future dated payments through their respective online banking tool.

Ban k of India Card Payment through NEFT

Benefit NO 04:: Centralized Customer Facilitation Centers facilitate quick resolution of queries.

Benefit NO 05:: Positive conformation by the Beneficiary Bank.

The main grouse of NEFT users was the non-availability of any conformation once the beneficiary has received the customers. They were multiple complaints from corporate that the beneficiaries did not receive the funds. In majority of the cases it was noticed that the funds were received by the beneficaries, however in the absence of any conformed messages, Banks were finding it difficult to respond to queries.  Hence, Reserve Bank of India introduced the concept of “Acknowledgement / Positive Confirmation by the Beneficiary Bank”. This step was welcomed by the Users and led to increase in the NEFT volumes.

How does the “Positive Conformation”, work?
The originator has to indicate his/her mobile number or email id in the NEFT Application while initiating the transaction. Usually, the customers’ mobile number and email id is picked up from the CBS Module.

·         After successfully crediting the Beneficiary's account, the beneficiary bank will send a Credit Acknowledgement message indicating “credited to customers' account” to the originating bank through NEFT Service Centre.

·         The originating banks after receiving the positive confirmation message from the beneficiary bank, initiates a mobile SMS or generate an e-mail to the originator to convey the fate of the transaction.

Basing on customization for corporate customers, this positive conformation message can be part of the MIS available in the corporate banking website.

Benefit NO 06:: Return Transactions are highlighted with special narration in the customers statement of account.  The originating bank has to provide the description “NEFT-Return” in the pass book / account statement of the originator whose NEFT transaction is returned.

Benefit NO 07:: Standard narration in Beneficiary’s statement of bank account . Another main grouse from the beneficiaries was improper narration in the statement of bank account. To minimize such complaints, Reserve Bank of India has advised all Banks to provide standard narration for NEFT Credits.

After crediting the account of the beneficiary, the beneficiary bank has to advise the beneficiary of the funds received.

The Account Statement / Pass Book entry or any online messaging system shall indicate briefly the source of funds as well.

 For this purpose, the mandatory field 6091 which contains the remitter's name shall be picked up for the source of credit and information contained shall be printed in the Account Statement / Pass Book.

Banks originating transactions shall ensure proper and meaningful details are provided in this field. Description of field 6091 is : 

M  6091  Sending customer a/c name    50x    Sender's account name

Benefit NO 08:: Almost Real time credit to Beneficiary account. The beneficiary branches have to make the payment to the beneficiaries within two hours of batch settlement time by crediting the specified account of the beneficiary or otherwise placing funds at the disposal of the beneficiary.

NEFT presently functions with a Batch+2 (B+2) return cycle. The B+2 return discipline requires  banks to afford credit to the beneficiaries' account immediately upon completion of a batch else return the transactions within two hours of completion of the batch settlement, if it is not possible to afford credits to the beneficiaries, for any reason.

Therefore, an inward credit message which is not returned within two hours from the time at which the payment instructions are processed at NEFT Centre (B+2) is treated to have been completed and credit afforded to the beneficiary's account by the beneficiary branch. It is, therefore, vital that banks systems are geared to credit within 2 hours of the batch or are re-transmitted back as return NEFT transactions in the immediate next batch itself.

Benefit NO 09:: Corporates can request their Banks to customize MIS, introduce additional filters before a NEFT credit is transmitted. The concept of virtual accounts is very popular amongst Corporates.

Benefit NO 10:: Reduce the reconciliation time from few working days to few hours.

Benefit NO 11:: Be a partner of Reserve Banks of India ‘LessCash’ Mission.

Additional Reading:

01 _ Kotak Life Insurance – Payment of Premium through NEFT
Make premium payments through your bank account using National Electronic Fund Transfer (NEFT). Log into your Net Banking, select the option NEFT transfer and enter the below mentioned details:
Beneficiary account -  99800KLIFExxxxxxxx
(The number after KLIFE would be your 8 digit Policy Number)
For example if your policy no is 00921500, the beneficiary account would be 99800KLIFE00921500
If your Policy No is less than 8 digits, please add requisite number of zeroes before the Policy No
Read more at Premium Payment Options


03 _ Optimising Commissions and Payout Mechanism For G2P Payments Under Electronic and Direct Benefit Transfer

04 _ Piloting Basic Income Transfers in Madhya Pradesh,India

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