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National Automated Clearing House

1. What is NACH?

NACH (National Automated Clearing House) is a funds clearing platform set up by NPCI (National Payments Corporation of India) similar to the existing ECS of RBI. NACH (Debit) & NACH (Credit) aims at facilitating interbank high volume, low value debit/credit transactions, which are repetitive in nature, electronically using the NPCI service.

2. How are NACH and ECS different?

NACH ECS
A robust Mandate Management System that includes a standardized mandate format and a defined workflow for mandate verification. Mandate verification is done based on physicals, resulting in verification issues and delayed timelines.
Unique mandate registration reference number will be available, which will allow for better tracking. No such concept of a unique mandate registration reference number.

3. What are the variants of NACH?

Primarily there are two variants of NACH – NACH Debit & NACH Credit.

4. What is NACH Credit?

NACH Credit is an electronic payment service used by an institution for affording credits to a large number of beneficiaries in their bank accounts for the payment of dividend, interest, salary, pension etc. by raising a single debit to the bank account of the User Institution (Corporate registered for NACH Services).

5. What is NACH Debit?

NACH (Debit) facilitates the Corporate for collection of telephone / electricity / water bills, cess / tax collections, loan instalment repayments, periodic investments in mutual funds, insurance premium etc., that are periodic or repetitive in nature and payable to the User Institution (Corporate registered for NACH Services) by large number of customers etc.

6. What are the key features of NACH Debit?

NACH Debit is a Mandate based debit service. Following are the key features of the NACH Debit:

  • Automated processing and exchange of mandate information electronically with well defined timelines for acknowledgement/confirmation.
  • Each mandate needs to be accepted/ authorized by the debtor bank before the User can initiate a transaction.
  • Each mandate is uniquely identified by Unique Mandate Reference Number (UMRN), which makes tracking of multiple mandate details easier for customers.

7. What is a mandate?

`One Time Mandate` is a one-time registration process. It is just an authorization to your bankers to debit your account with a fixed amount or up to a certain limit as per the frequency given by you in mandate form.

8. What is the size of the Mandate? Is it mandatory to restrict mandate to the specified size?

The mandate has to be in the size of a standard cheque ie. 8” x 3 2/3”. It is mandatory to restrict the mandate to the size mentioned above.

9. What is UMRN?

UMRN - UMRN is a Unique Mandate Reference number allocated to each new mandate created in NACH Debit. It is auto generated by the NACH system during mandate creation. UMRN is mandatory for every transaction and even during mandate amendment and cancellation.

10. I wish to repay my PNB loan installments through my Saving Account maintained with other Bank? How to proceed?

Please submit duly filled and signed NACH Mandate form to your PNB Branch. Branch will get the mandate approved from your Bank through internal process. Once the mandate is approved, the loan installment will be start deducting from your account on the date/ frequency as mentioned by you in the Mandate form. Normally in takes T+5 days in approval of mandate, but the time taken may be longer in some cases due to multiple reasons being the involvement of multiple stake holders. Hence, it is advised to submit mandate at least 15 days prior to the due date of loan installment.

11. Can I make changes in NACH details registered?

Yes. You can modify the details registered for NACH by filling the Mandate form and ticking the option as `Modify`. You can also cancel NACH registration by filling the Mandate form and ticking the option `Cancel`.

12. I have already registered myself through ECS? Do I need to register again for NACH services?

No, you need not to fill mandate form again. The existing mandate will continue to be valid for NACH services.

13. I am a Corporate and wish to avail NACH services for making payments to my employees and collecting funds from my clients on regular basis. How to proceed?

Corporate needs to be register for NACH services at NPCI through their Branch. On registration, NPCI will allot a Utility Code (User Number) to the corporate.

The further process is as under:

a. NACH (Debit):

i. Corporate customer will obtain NACH Mandate forms from his clients and submit to the Branch. Branch will get the same approved from destination Banks of the clients through internal process. Normally in takes T+5 days in approval of mandate, but the time taken may be longer in some cases due to multiple reasons being the involvement of multiple stake holders. Hence, it is advised to submit mandate at least 15 days prior to the due date of collection of payments.

ii. After approval of mandates, Corporate may submit transaction file to the Branch as per given frequency on the specified format of NPCI.

b. NACH (Credit):

i. Mandates are not required.

ii. After getting Utility Code from NPCI, Corporate may submit NACH Transaction file to the Branch for further processing on the specified format of NPCI.

14. What are the benefits of NACH?

For Consumers:

  • Timely payment of bills /instalments /premium without remembering the due dates.
  • Faster processing time and less manual intervention.

For Banks:

  • Less dependence on cheques and paper based transactions.
  • Faster processing time and less manual intervention.
  • Better service to customers and affiliate organizations.

For Corporate (User Institutions):

  • Better customer service.
  • Timely dispersal of salaries, dividends, collection of EMIs and clearance of bills.
  • Facilitates automatic credit of variable benefits like allowances, scholarships etc.
  • Less dependence on cheques and paper transactions.

15. What are the prerequisites for availing NACH services for Corporate?

Corporate wishing to avail NACH services needs to be registered with NPCI & obtain Unique Identification Code (Utility Code) for NACH services through their sponsor Bank.

16. What do you mean by “Utility Code”?

Utility Code/ Corporate User ID refer to the User Number that has been allocated by NPCI, to the Corporates.

17. What is a ‘User Number’? Can a single corporate have two or more user numbers?

It is the ID issued to a corporate that is linked to the Sponsor bank. The corporate will have to get a new User number if it changes its bank or will have to maintain multiple user number if it is transacting with more than one bank.

18. Is the User Number unique to the Corporate or is it linked to the Sponsor Bank?

User number is unique across the system. If a corporate has a tie up with two banks he will have 2 user numbers.

19. Define Sponsor Bank?

Sponsor Bank is the Bank, who lodges NACH Transaction files for collection/ distribution of funds on behalf of their Corporates registered for NACH services. In case of loan EMI, the Bank acts as User Institution as well as Sponsor Bank.

20. Define Destination Bank?

The Bank responsible for processing of Inward NACH file is known as ‘Destination Bank’.

Service Charges:

Exceptions:

NACH transaction charges are not applicable in respect of Income Tax Refund Orders.

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