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Apply NowImagine paying Netflix or Amazon Prime for your monthly subscriptions in their office every month. Sounds absurd, right? Thanks to digital banking, we can do not have to visit any corporate office for making regular payments. Digital banking has made things easy, allowing us to pay for subscriptions and EMIs without stepping out of our house.
Automatic payments have become seamless, thanks to systems like the NACH. This article will look at what NACH means and how it works in banking.
Companies can withdraw recurring payments from your account every month without your intervention, thanks to automatic recurring payment methods. NACH is one such method. It is an online solution that can be used by banks, companies, enterprises, governments etc., to collect periodic payments. NACH is behind most of your automatic payments from your home loan EMI to your SIP investment. It helps companies and their customers save time and automate payments.
NACH stands for National Automated Clearing House. It helps simplify automatic payments, although it isn’t the first method to do so in India. The history of automated payments in India started with Electronic Clearing Service (ECS). ECS was a revolution when it was introduced, and it was able to replace a lot of manual work, especially in salary and pension disbursements.
As demand increased, ECS became inadequate to meet the needs. NACH was then introduced, and it worked like a treat! It was faster, easier, and entirely online. Most of ECS is now replaced by NACH, and it remains the most polished method.
UPI mandates are gaining ground, but their payment limits remain a problem. Until a solution is found, NACH will remain the undisputed leader of payment methods in India.
For a company or a lender to collect payments directly from your bank account, you will have to authorise them. Such authorisation is called a mandate. In NACH, the mandate will contain the total amount the lender or the company can withdraw from you, including penal interests and the mandate's duration. The process can be done online as well.
Once you sign the mandate and the same is presented to the bank, payments will be automatically deducted from your account every month.
Most banks, including IDFC FIRST Bank, process the mandate swiftly. With IDFC FIRST Bank, you do not need to worry about late payments charges. You can also seek help in case something goes wrong.
One important thing to note here is that failure to keep sufficient balance at the time of payment request might attract penal charges. In loans, it might also hamper your credit score.
NACH comes with the following benefits.
NACH payments are easy to spot as they are stated along with every payment. You may contact your bank if you want to cancel the mandate. But do note that cancelling the mandate will not free you from having to pay your EMIs back.
NACH is one of the most helpful payment tools that save corporates and individuals time and money. Ensure you read your NACH mandate carefully before signing to ensure the details are correct.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.