July 25, 2017

NIBSS Electronic Fund Transfer (NEFT)

A NEFT is an irrevocable fund transfer instruction where a bank simply captures their customer’s funds transfer instructions electronically. However, the bank will first debit the customer’s account to ensure that the funds are set aside after which such a bank customer’s instruction (along with other customers instructions) are sent to NIBSS as an electronic file for onward processing. NIBSS subsequently processes each electronic file from banks containing several NEFT instructions to ensure the beneficiaries receive value such that their accounts are credited within a few hours. Bank transfers are more secure for both the customer and the banks.

There are no cheques that may be misplaced, lost or stolen. Furthermore, since the payment goes directly from the customer to the bank, there is no possibility of fraudulent alteration of the payment amount. The sender’s account is debited immediately in case of credit transfers. This makes account reconciliation much simpler for the customer. The customer does not have to worry about un-presented cheques being debited unexpectedly months later, on presentation by the payee. As NEFT credit transfers are credited directly, the payment process is much quicker than with cheques, which must first be presented to the paying bank in clearing. This can result in improved cash flow.
Any payment credited to the beneficiary’s account is a cleared item. There is no possibility of the payment being reversed for insufficient funds, drawer’s confirmation, irregular signature or any other reasons associated with cheques.