What Is NACH Mandate, & What Are Its Key Benefits?

This article explains what is nach, the timings and availability. It also explains difference between NACH and ECS, payment mandate, stopping it etc.

Most of us probably won’t remember the last time we stepped into a physical bank to carry out any transaction. Banking, in recent years, has become so simple that we can carry out almost every transaction from the comforts of our home. The advancement in technology has made withdrawing money for taking loans possible with a few clicks.
National Automated Clearing House or NACH is one such technological advancement towards simplifying Banking. NACH makes sure that your recurring expenses – from EMIs to investments are made directly from your bank account without any manual intervention. We will now see how NACH operates to make our lives easier.

What is NACH | Nach definition

NACH, also known as National Automated Clearing House, facilitates the easy transfer of funds between banks electronically. It was established by the National Payments Corporation of India (NPCI). NACH is useful for recurring and repetitive payments such as loan EMIs, utility bills, credit card payments, SIPs etc. You simply need to ensure that the fixed amount is available in your account at the stipulated period and NACH will enable the amount to be automatically debited.

NACH Timings and Availability

NACH is available on all days of the year, irrespective of weekdays or weekends. It, therefore, ensures the unhindered transfer of pensions, salaries etc.

What is The Difference between NACH and ECS?

The Electronic Clearing Service or ECS mandate was introduced by RBI to facilitate periodic payments. This system allows electronic credit and debit transactions from your account at regular intervals. However, this is now being phased out only to be replaced with NACH because of the superior facilities offered by the latter. Let’s now look at the differences between ECS and NACH.
1. ECS takes more time to settle a transaction as it involves a manual process, unlike NACH, which is web-based and is automated.
2. NACH generates a Unique Mandate Reference Number or UMRN that can be used for future references, unlike ECS which produces no reference number. UMRN helps provide data validation and also ensures safety.
3. ECS involves a lot of paperwork which is considerably reduced in NACH. It has a very convenient application process.
The settlement of payment usually takes 4 days in the case of ECS, whereas NACH payments are settled in a day.

What is NACH payment mandate

The NACH payment mandate authorizes entitled entities to withdraw the stipulated amount of money from a customer’s account until the date of its cancellation. This facility helps in the auto payment of utility bills, EMIs, SIPs etc.

Checking NACH mandate status

Most banks conduct their business through their dedicated apps. NACH, too, can be accessed through these apps with the help of internet banking credentials. Customers can usually instruct the automatic payments through these portals and also check the status of NACH payments.
Additionally, you can also walk into a bank and request the data that you are seeking.

Stopping a NACH mandate

The NACH mandate can be canceled or modified at any time by contacting the bank either through email or by visiting the bank. The bank may take around 6 days to execute the request for modification or cancellation.

Cost of NACH mandate

The bank usually charges a processing fee for the transactions executed through the NACH mandate. In case a payment request fails due to insufficient balance in the customer’s account, the bank may levy a penalty for the failed transaction.

Benefits of NACH

For Consumers – The primary benefit that NACH brings to consumers is doing away with remembering the consumers’ payment dates for the monthly pay outs. As the amounts are debited from the bank account automatically, there’s no need to remember the dates for each recurring payment.
The transaction is settled in a single day and there are facilities for swift cancellations as well.
The transfer request can be safely authenticated by using the net banking credentials. This secure process helps consumers build their trust in NACH.
For Organizations – NACH has phenomenally reduced the time taken for sending money to a great lot of beneficiaries. The easy and quick bill settlement brings a great deal of customer satisfaction for business organizations.
The NACH mandate also does away with the need to clear huge volumes of cheque payments.
We thus see that NACH has simplified our lives by taking care of all our recurring payments. You certainly should clear your mind of all the EMI and SIP payment dates and simply take advantage of the auto payments provided by NACH.​