What’s quicker – Getting NACH or Nachos? Let your fingers find out

Whether you are new to NACH or wondering what NACH or ECS is, you are parked at the right spot. Don’t worry, keep asking more.

Here’s a small, interesting chat between two friends for you.

Justin Bieber’s voice was blaring from behind the heavy doors. They had been standing for half an hour now, and the queue was only getting longer.

If his dad had come along with them, he would have been horrified at the sight of these young faces lining up like prisoners for their precious bowl of soup. “So, you pay for the ridiculously expensive food and still wait in a herd!” he would have screamed. Armaan chuckled at the idea of explaining the delights of spending a weekend evening at the latest hottest water-hole-of-the-town to his dad.

Usually, the young ones lost. But the argument was always a better appetizer than those cheese-balls served inside. Drooling at the word, nonetheless, he recalled – where was the other part of ‘they’?

Unusually silent, Ankit, his cousin, and his comrade for such parties, was eerily hunched over his smartphone. The shoving of elbows and the nauseating deodorant of a heavily tattooed hulk beside them did not seem to bother him today.

“What are up to Sri Sri Sri Ankit?”

Ankit’s head bobbed for a second as he answered absent-mindedly, “That PaySense instant personal loan we talked about last time, remember? Just finishing the last bit of that application…”

“Wow! So that’s what you have been up to! Smooth fingers!” Armaan beamed.

“Not really.” Ankit looked up disappointedly.

“Why?” Armaan peered over the phone and got a hint after spotting the word NACH.

“Hmm. So, stuck at the e-sign step there? I have been their pal. The good old NACH vs. ECS fork.” He said as he flipped his own phone out.

“Yes. What exactly is this new creature?” Ankit looked around at the long queue for the first time and sounded extra-exhausted.

“No sweat, my brat! ECS was the good old Electronic Clearing Service – the then mode of funds’ transfer from one bank to another. NACH is National Automated Clearing House – a web-based solution, instead, which smoothens-a.k.a.-fires up interbank, high volume, electronic transactions – the stuff that is often repetitive and periodic in nature (also for bulk transactions). Basically, it consolidates multiple ECS systems running across the country and wipes away local barriers/inhibitors.” Armaan spelt it all out.

Ankit was still not clear. “But why a new interface, a new complication? And how can I be up to snuff here?”

“It’s actually the opposite – the idea is to make things simpler.” Armaan dug in more. “NACH allows member banks to design their own products and fix specific needs such as a refined Mandate Management System (MMS) or the much-needed online Dispute Management System (DMS). There is much less paperwork, a better workflow, faster activation time, and hence, less rejection instances but snappier settlement time windows –Think 3-4 days for ECS vs. 24 hours under NACH.”

“So how?” Ankit rubbed his hands eagerly.

“NACH OTM is a one-time mandate form. You can get it from an AMC and fill it up easily. All you need are Bank Details, Personal info, Folio Number, application number, and some other info, as asked.”

WHAT IS NACH | PaySense | Infographic

“And is it safe?”

“Of course,” Armaan replied. “As safe as giving a cheque.”

Ankit scratched his chin. “You know what! If we have a choice between NACH vs. ECS, why don’t we try something faster for tonight’s party too? That fast-food truck we saw around the corner? It smelt nice there, Man. And I don’t think I am used to standing in endless queues anymore.”

“Since when?” Armaan winked as he swung his coat around and started walking out of the worried-and-harried corridor.

“Since PaySense.” Ankit said with a flourish, and they sped towards the most delicious Burritos ever – leaving all the slow-grilled steak behind.

From this episode you must have gotten an idea of what NACH is and how it is better than its predecessor—ECS or Electronic Clearing Service.

Below are a few brief information chunks on NACH.

What is NACH

NACH or National Automated Clearing House is a centralised electronic payment or transaction processing system by the NPCI or National Payments Corporation of India. If you want to know what NACH does, understand that it aims to facilitate interbank, high volume, low-value transactions that are periodic and repetitive in nature. 

NACH offers credit and debit services to banks, financial institutions, and corporates. The service is aimed to integrate all regional ECS into one National Payment System. NACH helps maximise the efficiency of the clearing repetitive payments.

What is NACH mandate

NACH mandate or e-Mandate is a service introduced by NPCI to reduce processing time and make recurring payments more efficient and streamlined.

NACH mandate provides the infrastructure for businesses to collect recurring payments in the country. It is a payment service that RBI and the NPCI initiated. 

Using the NACH mandate, you can authorize recurring payments using your debit card or net banking credentials. 

NACH mandate allows corporations and organisations to make bulk payments. Any institution authorized under the RBI criteria can use NACH Credit in order to send large payments in the personal bank accounts of multiple recipients.

What is NACH form

By downloading and filling NACH form, you provide authorisation to an institution to credit or debit funds from your account. 

There are two types of NACH mandates:

  • Credit type and 
  • Debit Type

The most commonly used NACH mandate type is Debit Type, which debits funds from an individual’s account.

You are required to provide your Bank Name, Bank Account Number, and the IFSC or the MICR code of the bank account if you wish the money to be deducted from your account. The mandate has a standardized format across all partner banks.

What is NACH payment mode used for

NACH payment mode is used for making bulk transactions towards the distribution of interest, subsidies, dividends, salary, pension, etc. The NACH payment is also used for bulk transactions made towards the collection of payments like telephone, water, electricity, loan, mutual fund investment, insurance premium, etc.

The NACH payment service has been operational only on bank working days until now. However, as per a direction from RBI, NACH will be available on all days of the week starting from August 1, 2021.