National Automated Clearing House

23 April 2017 | 1410 Views | By Mint2Save

National Payments Corporation of India (NPCI) has implemented an electronic payment system called “National Automated Clearing House (NACH)” that assists Banks, Financial Institutions, Corporates and Government departments.

It is a web based solution to ease interbank, high volume, electronic transactions that are recurring and periodic in nature. NACH System is used to make bulk transactions towards, dividends, interest, distribution of subsidies, salary, pension and more and also to collect the payments related to telephone, water, loans, investments in mutual funds, electricity, insurance premium etc.

Objectives of NACH:

National automated clearing house is a centralised system of India which begins with an aim:
To combine multiple ECS systems those are running across the country.
NACH will provide a national footprint and technology to robust platform so as to handle large volumes of repetitive payments.
It provide a harmonization of open standards and best industry practices and intends to provide a single set of rules for electronic transactions which are common for all the Participants, Service Providers and Users etc. and removes local barriers and inhibitors.
It also support the financial inclusion measures formed by Government and Banks by providing support to Aadhar payment transactions and Mobile based ACH transactions

Benefits of NACH:

The benefits of NACH are as follows:

The NACH system offers a strong, secure and scalable path to the participants with both transaction and file based transaction processing ability.
NACH allow transactions to be cleared in real time mode rather than batch mode.
It has top in class safety features, cost efficiency and payment performance (STP) joined with multi-level data justification service which is accessible to all participants across the country.
The structure of NACH system allows the member banks to design their own products to ensure the specific needs of the corporate clients, government, banks and individual beneficiaries.
The schemes under NACH structure offer customised MIS to banks.
The system has the scale for multiple intraday sessions.
The structure of online Dispute Management System (DMS)allows tracking of the transactions life cycle for the period of 10 years.

NACH Participating Banks

NACH system would offer a national footprint and is expected to wrap the entire core banking enabled bank branches extend across the country irrespective of the location of the bank branch. At present, major banks like, Citibank, Dena Bank, Central Bank of India, Deutsche Bank (DB), HDFC Bank, ICICI Bank, SCB, Vijaya Bank and Yes Bank are already participating in NACH. Other main banks like Axis Bank, Bank of Baroda, State Bank of India, IDBI Bank etc are expected to join NACH shortly.

Benefits of NACH to investors:

This NACH system offers a positive confirmation from investor’s bank about registration acceptance or non acceptance different from ECS.
The current registration time in ECS is 30 days but now registration time for NACh has been reduce to just 10 days.
Investors can avail this facility anytime in their future investments and can opt for one tiem registration.
Apart from SIPs, investors can make use of this payment mode for their lump sum mutual fund investments.
Awareness of funds from the investors account occurs on T day which helps investors to follow their payment on time.
NACH also offers the flexibility to the investors in making consequent investments over all schemes without use of any payment instruments such as DDs or cheques.

How to get register for NACH?

1) Fill the NACH OTM Mandate Form which includes

Account Number, Bank Name, IFSC Code, Branch..
State the maximum limit per day and mention it in words and also in figures.
Application Number/Folio Number/Mobile number and Email ID.
The time for which the Mandate is effectual. Period starting from.
Your signature as per your Bank account.

2) Submit form to your advisor or Mutual Fund Company.

3) For registration OTM Form will be sent to your bank.

4) The OTM form will be completed in 10-12 days.

NACH beneficial for banks, consumers and organizations

(I) For Banks:

Very Less dependence on paper based transactions and cheques/DDs.
Processing time is very fast and less manual intervention is there.
Best services offered to customers and affiliate organizations.

(II) For Consumers:

Payment of bills, instalments, premium are on time without recalling for the due dates.
Again faster processing time and less manual intervention for consumers.

(III) For Organisations: