NACH to be available on all days of week from August 1: RBI
Bengal Mirror, June ,6, 2021 : In the meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), Governor Shaktikanta Das announced that from August 1, 2021, the National Automated Clearing House (NACH) would be available every day. Presently this service is only available on all working days of banks.
What is NACH?
The National Automated Clearing House or NACH is a centralized web-based electronic payment service that helps banks, corporate sectors, several financial institutions and the government to handle bulk payments. It was a system established by the National Payments Corporation of India (NPCI) to facilitate all types of interbank, high volume payment structure and introduce best practices in electronic transactions. This system also helps corporate and financial institutions to receive higher amounts of payments. High volume payments consisting of water bills, electricity bills, telephone bill, loan EMI amount and mutual fund investment payments can be availed through the NACH solution.
What is ECS?
It is a mode of electronic fund transfer from one bank account to another bank account using the services of a Clearing House. This is usually for bulk transfers from one account to multiple accounts or vice versa. It can be used by institutions for making payments like distribution of dividend, interest, salary, pension etc. or for payment to utility companies like telephone, electricity, or collection of amounts for charges like house tax, water tax. etc. or loan installments of financial institutions/banks or for a regular investment of individuals.
12Difference Between NACH and ECS
Electronic Clearing System (ECS) is the method of online payment and money transaction and NACH was initiated to solve the issues that ECS encounters regarding the payment process. NACH platform is a robust mandate management system and can consolidate the current multiple ECS systems and provide a framework for the removal of the local barriers. As in the ECS platform Mandate, verification is done based on physicals and has other inherent challenges such as inconsistent timelines around post transactional query management and servicing. Apart from the Management System, if we talk about the availability, ECS or Electronic Clearing Service, as of now, is available at around 89 centers across the country. Whereas the NACH platform is available around 82,000 plus bank branches across India.
How will the new system affect you?
NACH is currently available only on days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, it is proposed to make NACH available on all days of the whole year with effect from 1st August 2021.
NACH emerged as a major mode of DBT
NACH has emerged as a popular and prominent mode of Direct Benefit Transfer (DBT) to a large number of beneficiaries. This has helped in the timely and transparent transfer of government subsidies during the current COVID-19 crisis. To further enhance customer convenience, and to take advantage of the 24×7 availability of RTGS, NACH will be available 365 days.
How NACH does benefits consumers, banks and organizations?
NACH is being introduced to facilitate everyone who is involved in bulk and high volume payments every month or so. From the customers to the banks to the organisations – everyone will be equally benefited through the NACH system. At present, the salary is credited to the account of the employees on the working days of the banks. But after this facility, the salary will be credited to the accounts even on holidays. All bills including water, electricity, telephone, mutual funds, loan EMIs, will now be paid even when there is a bank holiday.
