How to Transfer Money from One Indian Bank Account to Another

Are you looking to transfer money from one bank account to another without wanting to visit the bank? The RBI started a facility called National Electronic Funds Transfer (NEFT) which allows the user to transfer money online between accounts. Using this facility money can be transferred from any bank branch to any other bank branch within the country.

NEFT was essentially started so that small amounts of money could be sent at minimum cost. For money to be transferred using this facility, the banks need to have IFSC code and be part of the NEFT network.

Who can Send Money using NEFT?

Any individual, firms or business establishments having a bank account can transfer money using NEFT.

Those individuals, firms or business establishments who do not have a bank account can also use this facility. Such users are called walk in customers. For this purpose they have to deposit cash at the branch with instructions to transfer funds using NEFT.

A separate Transaction Code (No 05) has been fixed for the facility. These customers have to provide complete personal details.

The Exact Procedure of NEFT Transfer

The individual or firm or business establishments who want to originate or transfer funds through NEFT have to first give an application providing details of the beneficiary. The details include:

1. Name of the Beneficiary
2. Name of the bank branch where the beneficiary has an account
3. IFS code of the beneficiary bank branch
4. Account type
5. Account number

The application form can be obtained from the originating bank branch. The originator authorizes the branch to deduct the specific amount from his account and forward the same to the beneficiary.

The customers availing the net banking facility can start the fund transfer request online itself. Some banks offer the facility through ATMs also.

Though the facility is easily available to the account holders, the walk in customers must give their details personally to the branch. This is necessary because incase the transaction is rejected or returned for any reason or if the credit is not sufficient for the transfer, the bank refunds the money to the customer.

After receiving the authorization, the originating bank prepares a message and sends it to its pooling centre (also known as the NEFT Service Centre.)

The next step is by the pooling centre which forwards the message to the NEFT Clearing Centre to include the message in the next available batch. The NEFT Clearing Centre is operated by National Clearing Cell, Reserve Bank of India, Mumbai.

The Clearing Centre then sorts the funds transfer transaction based on the destination bank. Next it prepares accounting entries to receive funds from (debit) the originating banks and gives the funds to (credit) the destination banks. After this, remittance messages according to the banks are forwarded to the destination banks through their pooling centre.

The whole procedure is completed with the destination banks receiving the remittance messages from the Clearing Centre and forwarding the credit to the beneficiary’s account.

Thus money transfer online between banks is made easy using NEFT. The facility can be utilized by customers without bank accounts also.