Whenever your EMI falls on the weekend or on holidays, the lender debits your bank account one day earlier or the next business day. Soon that will change.
From August 1, the RBI will make the NACH facility available 24/7. The National Payments Corporation of India has set up the National Automated Clearing House or NACH platform. It facilitates high volume, repetitive and periodic electronic transactions.
Your employer could use NACH to transfer wages. The automatic repayment of EMI loans is also done through this platform. Governments, businesses and banks use it to distribute grants, dividends, interest, wages and pensions. They also use it to collect bill payments, loans, mutual fund investments, and insurance premiums.
According to Sanjeev Srivastav, chief risk officer, IIFL Finance, permanent NACH has many advantages.
“The lender can send payment requests on the due date, even if it is a holiday. Customers can therefore better plan their finances if payments are deducted on time. If there is an automatic debit for a credit card, the customer will not miss the due date because of the holidays, ”Srivastav said.
Companies using technology for debt collection and delinquency management examine NACH data to determine customer repayment behavior.
“This is a welcome initiative and should usher in greater efficiency in the banking system. The extension of the number of working days for NACH will ensure that the volume of collections will increase and reduce the bounce rate for loans repaid through NACH mandates, ”said Anshuman Panwar, co-founder of Creditas Solutions, a company that ensures management of unpaid bills. solutions.
The NACH mandate will also speed up the systematic investment plan (SIP) registration processing time and improve the investor experience. According to mutual fund distributors, it currently takes 2-3 weeks to register SIPs through NACH. The speed depends on the investor’s bank, with some smaller or nationalized banks taking longer to register.
“For the moment, most SIPs are scheduled for the 10th of each month, followed by the 5th, 15th and 20th. If distributors are confident in the processing times for shorter mandates, this will allow them to have Wider SIP start / cycle dates. It will also potentially reduce the load on MF’s online platforms on certain days, ”said Ganesh Ram, CEO of Mutual Fund Utilities (MFU), an online investment platform for mutual funds.
The delay or failure of NACH registration is the most common complaint from investors, and this may result in the new rules, he said.
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