Banks told to allow customers to use NEFT facility

The Reserve Bank of India has advised all banks to allow their customers to use the National Electronic Funds Transfer (NEFT) facility for repaying loans.

This directive comes as the RBI has received some complaints from customers regarding non-acceptance of NEFT for credit to loan accounts, thereby causing inconvenience to them.

On examination of the customers’ complaints, it was observed that only a few banks were following the restrictive practice of not allowing the use of NEFT for credit to loan accounts. These banks, however, were willingly taking Electronic Clearing System as one of the modes for repayment.

“It is, therefore, advised that all banks should allow the customers to choose NEFT also as one of the electronic modes of making payment towards loan EMIs/repayments, etc,” the RBI said in a statement.

NEFT was launched in 2005. The system is meant for one-to-one funds transfer and can be used for transferring funds to beneficiaries (individual, institutions etc.) and no restrictions have been placed thereon.

In March 2012, the total number of NEFT transactions recorded by the banking system was 2.71 crore for a value aggregating Rs 2.4 lakh crore.

The RBI said that the phenomenal growth in the NEFT system, both in terms of branch coverage and volume/value of transactions handled, reflects the acceptability and popularity of the system.