National Electronic Funds Transfer (NEFT) - Acceptance of NEFT inward for credit to Loan Accounts

Reserve Bank of India, vide Notification No.RBI/2011-2012/496, DPSS (CO) EPPD No.1894/04.03.01/2011-12, has advised all Banks to accept Loan Credits via NEFT also.

This advisory was necessitated as RBI had received some complaints from customers regarding non-acceptance of NEFT for credit to loan accounts, which was causing inconvenience to the Loan Customers.

As the Banks were willingly taking ECS (Dr) as one of the modes for the repayment and NEFT also being an electronic transfer mode, Banks have been advised to allow the customers to choose NEFT also as one of the electronic modes of making payment towards loan EMIs / repayments etc.

5 reasons as to why do Banks not prefer NEFT Credits to Loan Accounts?

1. Loan Accounts are not part of the Core Banking System, hence, real-time verification of Loan Account Number and customers' name is delayed.

2. Customers might pre-pay the Loan which might not be preferred by Bankers.

3. The actual credit to Loan Accounts might take 2/3 days, in between if the ECS transaction is generated and sent to the Destination Bank, the customers account in the other bank might be debited twice for the same installment. This leads to subsequent customer complaints at a later date.

4. Customers might remit a lesser amount than the Monthly Installment amount, leading to overdue interest being charged in the Loan Accounts. If this is not properly communicated to the Loan customer, there are high chances of customer complaints.

5. If there are multiple credits in a single month, the EMI (Equated Monthly Calculation), will be lopsided, with no clarity.

7 tips to ensure that your NEFT credits to your Loan Account are hassle-free: -

a) Activate your Loan Account in the net banking module.

b) Add the Loan Account as a Payee in your net banking module, funds remitting bank account.

100. Do a test transfer of say Rs10/- and verify the credit in your Loan Account.

d) This will also enable you to know the Lead time between the actual NEFT transfer and the actual Loan Account, which will be useful when transferring the actual payment

e) Once the amount is transferred, inform the details to the customer service email id of the Loan Bank.

f) Verify the credit in your loan account after couple of days.

g) In case of any doubt, immediately mail/lodge query with the respective Loan Bank.

107+ Banks are on NEFT platform, with 2,16+crs transactions being put through the same.

Well, apart from Banks, there are other financial institutions which disburse Loans and collect the repayments through ECS(DR). Trust NEFT credits to such Loan Accounts will also be enabled soon.