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Showing posts with label NACH. Show all posts
Showing posts with label NACH. Show all posts

Saturday, June 26, 2021

 

New NPCI Circular to improve the strike rate of NACH Debit Mandates

            The strike rate pf NACH Debit Mandates refers to the successful registration by the account holders bank.

            Destination Banks return physical NACH Debit Mandates due to a variety of reasons. The reasons can be varied as:

o   Drawer Signature Differs

o   Drawer signature required

o   Image not clear

o   Amount of EMI more than the limit allowed for the account

o   Mandate registration not allowed for CC Account

o   Date mismatch with image_account number

And so on, and so forth

            The reference circular for NACH Debit Return Reasons is NPCI NACH Cir No 16 dt.November  28, 2019.

            Vide the above circular, major changes in the Return process were introduced by NPCI.

            For the first time, NPCI introduced the concept of Penalties on destination banks for returning mandates with specific reason.

            The return reason is:

MO49 - Drawer Signature not updated in CBS

Rationale: It is the sole responsibility of the destination bank to upload drawer’s signatures in all the accounts of the bank. The sponsor bank or corporate is not at fault. The corporates should not be penalized for destination bank errors.

 The following table shows the trend of mandate registration for the last year


 


Break-up of the rejected mandates return-wise is not available in the public domain.            

NPCI on June 18,2021 released fresh operating guidelines to improve the success rate of NACH mandate registration.

The circular focusses on three return reasons

Return Reason 01) Signature Mismatch:

Where there is a marginal signature mismatch, NPCI has advised banks to implement the following in the process flow –

i)                    Review by a higher official

ii)                  Seeking confirmation from the customer through tele-calling and authentication.

This is applicable only to physical mandates, as there is no Wet Signature in case of digital mandates.

Return Reason 02) Mandates drawn on CC (Cash Credit /Overdraft) account:

o   There is a specific return reason i.e Mandate registration not allowed for (Cash Credit) CC Account.

To avoid rejection of the Mandates issued for genuine business purposes, destination banks are advised to focus on the purpose tag of the mandate. Based on the mandate purpose tag, banks may have a clear picture as to what mandates should be rejected for this reason.

Ideally, appropriate business rules can be built in the bank’s processing system, to flag mandates matching the pre-defined purpose tags.

This is applicable to both physical mandates as well as digital mandates.

 

Return Reason 03) Return on account of insufficient balance to recover processing fees: Almost all the banks charge their customers for NACH Debit Mandate registration in their accounts.

For eg: Quote

HDFC Bank – One-time Mandate Authorisation Charges per mandate (Physical / Online)            Rs. 100/- + GST (effective 1st July 2019)

 

State Bank of India – 32. National Automated Clearing House (NACH) Mandate (including ‘E’ mandate)

One-time Mandate Authorisation Charges per mandate 50/- + GST

Failed Mandate 250/- +GST

 

Punjab National Bank – Inward NACH Mandate Verification - Rs. 100/- per mandate on acceptance

Unquote

The above are just examples, the actual mandate registration charge may vary within the same bank, based on account variant.

Few banks are returning the NACH debit mandate if the balance in the account at the time of the mandate registration is not sufficient to recover the respective bank’s registration charges.

Now, NPCI has advised banks not to Reject mandates if there is insufficient balance to recover the registration charges. The logic is that registration of NACH debit mandate is a non-financial transaction and not a financial transaction.

  This is applicable to physical as well as digital mandates.

 

Disclaimer: I am solely responsible for any errors. The bottom line is ‘Mission #LessCashNotCashLess’. Nothing more – Nothing less

 

 

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Tuesday, August 15, 2017

National Automated Clearing House – Banks are requested to adhere to the laid down rules

          NPCI through circular dt July 19, 2017 has strictly advised all member banks participating in NACH Mandate Management System to adhere to laid down procedures while processing mandates.

          Mandate Management System is in operation from 2013 and over the years, 2.71 crores mandates have been added to the MMS repository.

          It was brought to the notice of NPCI that some of the member banks had started formulating their own rules for acceptance of mandates. Such non-standardised processes by banks have led to confusion in the participants of NACH eco-system.  

          Hence, NPCI to restore order in the NACH eco-system has advised Banks to strictly follow the laid-down procedures while processing the mandates.

          However NPCI is open to suggestions and has advised member banks to put forth any process improvement points to the Steering committee. The process improvements points will be deliberated at the Steering committee and further action will be planned.

          Yes, non-members too can put their points to the Steering Committee. This is a welcome step by NPCI


QUOTE

Mandate Management System (MMS) is an essential part of National Automated Clearing House (NACH) service. The Mandates are necessary from the regulatory National Automated Clearing House perspective in order to process NACH transactions.
As a step towards streamlining the process and making it more customer and participant -friendly, it is proposed to implement the MMS, where mandate information is captured on a standard cheque like mandate form.

UNQUOTE


Monday, March 16, 2015

NACH Debit – India’s ePayment Highway for Digital Transactions


          It is said that numbers do not lie and the numbers say everything. The below are the number of Banks on NPCIs’ NACH Debit platform.

 
ACH Debit Banks
CO-OP
188
FOREIGN
16
LAB
1
PRIVATE
19
PSB
21
RRB
8
Grand Total
253

 The first ACH debit transaction was executed in July 2013 with 88 transactions. Within a span of 20 months the volumes rose to Seven lacs +.

There has been tremendous growth in the last six months. Month on month, there is an increase of 1,00,000 transactions.
 
ACH Debit Volumes
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
252657
337578
419165
509293
595553
719400

 There have intense discussions amongst NPCI, Banks and Billers on the ways and means to increase safe ACH Debit transasctions.
 

Billers are building products designed to take the best of NACH Debit.

The mutual fund industry is quickly adapting to the NACH Debit platform to encourage investors to move funds from their bank accounts to the mutual funds in a safe manner.

In the next couple of  months, a large number of billers are expected to sign up on the NACH Debit Platform.

The primary infrastructure has been stabilised and the system has enough capacity to handle more than 10,00,000/- transactions per day.

Billers are also gearing to flash a number of alerts to ensure a high success rate.

NPCI has removed 4 irrelevant return codes from the NACH Debit platform. The four codes are

a)     No such account

b)    Account description does not tally

c)     Mandate not received/UMRN does not exist

d)    Invalid Account(NRE/PPF/CC)

 

Monday, December 29, 2014

2015 – 10 Trends to look out in Safe eTransactions

            In another couple of days, 2014 will move out of our lives, and 2015 will enter our lives.

            The following are the Trends which will dominate Safe eTransactions in India.
Rising Trends


01) Cash Transactions will continue to grow. The channel mode will shift from ATMs to Branch Banking channel

02)eWallets will see a spike. The trend will be on Semi-Closed eWallets and Open eWallets

03)IMPS (Instant Mobile Payment Services) will witness  far-reaching transactions jump

04) Biometric Authentication services will witness new transaction modes being added

05)eTransactions frauds. The law enforcement agencies/customers/banks will be baffled with new strains of eTransactions frauds

06)The rise of Chota ATMs

07)NACH (National Automated Clearing House) will see new corporates as Participants


Declining Trends

01) The average number of ATM financial transactions will fall as the customers try out alternate payment channels

02) ECS (Electronic Clearing Services) volumes  will reduce rapidly by 3rd quarter


03)Physical cheques volumes will see a fall as bank branches too prefer eTransactions

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All efforts have been made to make this information as accurate as possible, N Prashant will not be responsible for any loss to any person caused by inaccuracy in the information available on this Website. Relevent Official Gazettes Communications may be consulted for an accurate information. Any discrepancy found may be brought to the notice of N Prashant