Mumbai, April 6, 2017
The Reserve Bank of India has enabled faster settlement of the process of NEFT (National Electronic Fund Transfer) by increasing the settlement cycle to 23 from 12 currently to facilitate half hourly settlements instead of the hourly settlement system practiced now.
When a transaction is done at a bank branch the branch forwards the clearance request to the RBI to be accommodated in the next settlement cycle, thus increase of the number of cycles will allow faster settlement of funds and more funds to settle in a day.
“The NEFT settlement cycle will be reduced from hourly batches to half hourly batches. Consequently 11 additional settlement batches will be introduced 8.30am onwards, taking the total number of half hourly settlement batches during the day to 23,” said the RBI in its first monetary policy statement of 2017.
The regulator has decided to keep the starting time of the settlement cycle and the ending time at 8 in the morning and 7 in the evening and settlement will happen within two business days as was the practice earlier.
NEFT is an electronic fund transfer mechanism that the RBI runs for fund transfer between individuals, corporates and firms having account in any branch of any of the banks who are participating in the scheme. According the RBI website there are around 183 banks who participate in the system.
However there is a limit of Rs 50,000 for each transaction and settlements happen only between Monday and Friday and only six settlements happen on Saturday. The RBI has specified rates for NEFT transfers depending on the amount transferred.
[The Economic Times]