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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