Difference between NEFT and Net Banking

Key Difference: ‘NEFT’ stands for National Electronic Fund Transfer. ‘NEFT’ is an electronic fund transfer system in which transactions are settled in batches during specific timings. Net Banking is the facility to conduct the financial transactions through a secure website. It is also known as online or internet banking, as the transactions are conducted using an internet connection.

 

We often need to transfer the funds from one account to the other. The advent of new technologies had made the task very easy. Looking at the back, one can easily remember a long queue of people in bank for various purposes. NEFT and Net banking are two important services that are provided by the advancing banking sector.

 

 

‘NEFT’ stands for National Electronic Fund Transfer. NEFT enables the individuals or institutions to electronically transfer the funds from any bank branch to any individual or institutions that may have an account in any other bank branch in the country participating in the Scheme. This system was launched in November 2005 in India. In India, Reserve Bank of India ordered all banks of India to migrate to NEFT by mid December 2005. A bank branch must be NEFT-enabled to use the NEFT funds transfer network. Individuals or institutions which maintain accounts with a bank branch are eligible for using NEFT. Even such individuals who do not have a bank account can also deposit cash at the NEFT-enabled branches with instructions to transfer funds using NEFT.

 

Net banking is very effective mode for carrying banking transactions specially now a days. Today, most of the users are aware of the internet and know how to use it. This facility is very convenient for the customers as they do not require going to the bank for various banking activities and after simple few clicks the job gets done sitting at home. The only thing that is mandatory for the net banking is the internet connection. This facility is provided by most of the banks. The bank updates accounts and records of transactions instantly on the Internet. All routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests can easily be done using net banking. Some banks also offer online loan and credit card applications.

 

According to the U.S. Department of the Treasury, there are three types of Internet banking: informational, communicative and transactional. These are:-

 

  1. Informational Banking: In this kind of online banking, the banks just provide the information about its products and services. One just needs to visit the website of the bank, using a web browser. The information is displayed and therefore it is known as information banking.
  2. Communicative Banking: In this kind of online banking, the customer or user is able to have a fundamental interaction with the bank and can avail information or enquiries related to his account with the latest updates.
  3. Transactional Banking: This provides the user to fully control his accounts: deposits, withdrawals, transfers, updates and online payments. The banks that provide the facility of transactional banking must ensure proper security in carrying out the transactions online.

 

The banks with internet banking facility provide a user-id and a password to the user. Through these credentials, the user can access his account and avail the facilities of internet banking provided by his bank. Thus, we can conclude that both NEFT and net banking are associated with the electronic banking. NEFT is used for transfer of funds within the country whereas net banking enables user to access the accounts and carry out the transactions using an internet connection. NEFT has been introduced by RBI in India. However, some banks also provide NEFT service through net banking.

 

 

NEFT

Net banking

Definition

‘NEFT’ is an electronic fund transfer system in which transactions are settled in batches during specific timings

Net Banking is the facility to conduct the financial transactions through a secure website. It is also known as online or internet banking, as the transactions are conducted using an internet connection

Money Transfer System

Usually takes up to 48 hours

Generally instant

Usage

electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country

All routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests (depending upon the facilities provided by bank under internet banking)

Amount

(In India) Generally no limit for minimum

No maximum limit under corporate internet banking

Maximum limit of Rupees 5 lakhs  under Retail Internet marketing

Varies

Category

Electronic Banking

Electronic banking and Mobile Banking

Timings

Business hours of Bank

Anytime

Holiday restrictions

Yes

No

Coverage

Transactions within the Nation

National and International (depending upon the bank)

 

Image Courtesy: bankingawareness.com

            Image Courtesy: girlyhour.com

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