NEFT – New Settlement Batch @ 8.00am

NEFT – New Settlement Batch @ 8.00am

This is with reference to the new NEFT feature of T+2 hours settlement cycle.

The T+2 hours settlement cycle means that the Beneficiary Bank has to credit the respective accounts within 2 settlement cycles or Return, in case the credit cannot be afforded.

Why cannot some NEFT Transactions be credited to the beneficiaries account?

The primary reasons are

1. Invalid Beneficiary Account Number
2. Incorrect Beneficiary Name I.e There is a mis-match in the Beneficiary name as mentioned in the NEFT Transaction and the Beneficiary's name in the Bank Account.

The Secondary reasons are:-

1. Account Closed
2. Credit Restrictions in the account for eg: No-Frills account.
3. Account does not exist, credit meant to A Bank Account is sent to B Bank Account !!

Do all NEFT transactions require the T+2 hours settlement window ?

In my opinion no. Any business transaction has a normal processing cycle and a quick processing cycle.

This is visible in every sphere of life

Railways-Sleeper and AC,

Temple Darshan – Ordinary and VIP, based on the cost of the entry ticket.

Bank Accounts – Based on the Average Quarterly Balance – Additional features are offered

Cinema Tickets – Ordinary and Balcony.

Than why do all NEFT Transactions have to adhere to T+2hours Settlement Cycle.

There are many types of transactions which can have a different Settlement Cycle, than the T+2hours settlement cycle.

1. Dividend Payouts
2. Vendor Payouts
3. Insurance company Payouts
4. Etc

Hence, I suggest an additional Settlement Cycle. Any new suggestion has to be 01) Simple to understand

2. Easy to implement

I propose the following new Idea:-

A new settlement cycle at 8.00am, for Bulk uploads. The Settlement Cycle for the 8.00am Batch, will be T+1 day.

In the 8.00am NEFT Settlement Cycle,

1. Dividend Payouts
2. Vendor Payouts
3. Insurance company Payouts
4. Etc

can be settled. As the transactions are not direct customer initiated, a little delay will not hurt any one and at the same time will boost the volumes in NEFT.

The T+2hours Settlement Cycle, is a wonderful concept and has many benefits in it.

But, I feel that the driver for NEFT Volumes, will be the bulk uploads viz Dividend Payouts, Vendor Payouts, Insurance company Payouts. Of course the individual transactions will constitute a major chunk of the overall NEFT Volumes.