We’re happy to announce that we’ve adopted the National Automated Clearing House (NACH) system for bank mandates. This is a modern, fully automated system for periodic debits created by the National Payments Corporation of India (NPCI).
NACH is “a centralised system launched with an aim to consolidate multiple ECS systems running across the country,” to provide a “robust, secure and scalable platform” for such transactions.
FundsIndia is among the first financial services provider in the country to adopt this progressive method.
You can click here for more information on NACH.
Before we look at the advantages of the new system, let us clarify a couple of things:
- You do not need to worry about your ongoing SIPs. The existing mandates will continue to be valid. No changes will be made to your ongoing SIPs.
- Presenty, the NACH system is applicable to about 62 banks. Although this looks like a big, comprehensive list, there is one notable omission in this set – SBI and the other state banks are still in the process of getting into the NACH platform. For now, they will use the existing mandate system. However, banks are being added very fast into this system by NPCI, and we expect SBI to join very shortly.
Why are we moving to this system? What are the advantages for you, the investor?
Due to the streamlining and automation of the behind-the-scene processes, NACH offers quite a few advantages over the ECS process we have been following presently.
- The time for registering an NACH mandate is less than two weeks. So, the turn-around time for starting a new SIP will be drastically cut with the new system.
- The time for receiving credit for the NACH debits is only one business day. So, the execution of your SIP will be faster too.
- Due to the centralised and automated nature of the process, the probability of errors goes down significantly. Since there are no paper-flows to the bank branches, there will be no more ‘ECS mandate not found’ errors
- This uniform, quick processing allows us to launch new services – we’ll soon allow you to make lump-sum, ad-hoc investments using your registered NACH mandate. And although that would mean that your transaction would execute with the next-day NAV, you can avoid any internet banking issues for payment. This could be particularly useful to clients of banks such as Citibank with which we do not have a net banking interface.
This is just a start. There are more interesting things that can be done to make investing convenient and hassle-free when banking systems offer uniform, integrated, automated services such as NACH. And as always, FundsIndia will be at the fore-front of any such development!
Get FundsIndia’s articles delivered straight to your inbox!
Enter your email address to get:
- Mutual fund recommendations from experts
- Buy, hold or sell calls for stocks
- Investment tips and tricks
- All the latest news from Fundsindia.com