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Questions and Answers
What is the process through which customers initiate a fund transfer via the NEFT system?
What is a key feature of NEFT regarding transaction settlement?
Which of the following statements accurately describes the availability of NEFT?
What is one of the benefits of using the NEFT system compared to physical cheques?
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How does NEFT ensure the security of transactions?
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What is a notable tracking feature of the NEFT system?
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Which of the following is an advantage of NEFT in terms of cost?
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Study Notes
National Electronic Fund Transfer System
Functioning
- Definition: NEFT is a nationwide payment system facilitating one-to-one funds transfer.
- Structure: Operated by the Reserve Bank of India (RBI).
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Process:
- Customers initiate a fund transfer through a bank branch or online banking.
- Requests are submitted to the NEFT system in batches.
- Transactions are processed in hourly intervals.
- The recipient's bank credits the funds to the beneficiary's account upon receipt.
- Settlement: Real-time gross settlement is not used; instead, transactions are settled in batches.
- Availability: Operational on all days, including weekends and bank holidays.
Benefits
- Convenience: Allows easy transfers without the need for physical cheques.
- Accessibility: Available to individual and corporate customers across banks.
- Cost-effective: Typically lower transaction fees compared to other remittance methods.
- Security: Transactions are encrypted and secure, minimizing fraud risk.
- Speed: Funds are usually credited within a few hours on the same day.
- Traceability: Offers a tracking mechanism for transactions, enhancing transparency.
NEFT: National Electronic Fund Transfer System
- NEFT allows individual and corporate customers to transfer funds between bank accounts
- NEFT is managed by the Reserve Bank of India (RBI)
- Transfers are initiated through bank branches or online banking
- Transactions are processed in batches every hour
- Transactions are settled in batches, not real-time
- Available on all days, including weekends and bank holidays
- Offers convenience, accessibility, cost-effectiveness, security, speed, and traceability
NEFT: How it Works
- Customers initiate transfers through bank branches or online banking
- Requests are submitted to the NEFT system in batches
- Each batch is processed in an hourly interval
- Recipient's bank credits the funds upon receiving the transaction
NEFT: Benefits
- Offers easy, accessible, and cost-effective transfers
- Secure due to encrypted transactions
- Generally credits funds within a few hours
- Provides a mechanism to track transactions
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Description
This quiz covers the functioning and benefits of the National Electronic Fund Transfer (NEFT) system in India. Learn about the process, structure, and advantages of NEFT for fund transfers. Test your knowledge on this essential banking service and its operational specifics.
