The National Automated Clearing House (NACH) block payment system will be available every day of the week from August 1, the Reserve Bank of India (RBI) announced on Friday.
The service, used for recurring consumer payments and direct government subsidy transfers, has so far only been operational on bank working days.
Managed by the National Payments Corp. from India, NACH facilitates one-to-many transfers such as payment of dividends, interest, wages and pensions as well as collection of payments related to electricity, gas, telephone, installments , investments in mutual funds and insurance premiums.
âThe RBI has taken successive steps over many years to ensure that digital payment options are available every day, every hour, and this is yet another step in that direction,â said Adhil Shetty, Managing Director of BankBazaar.com, a financial services marketplace. .
âWith the power of automated clearing, payment systems will work for you all year round, even on weekends. During covid-19, it is also necessary for payments to be made digitally to reduce the risk of contamination and therefore measures like these help, âhe added.
The RBI said that NACH has become a popular and important digital mode of transferring benefits directly to large numbers of beneficiaries.
âThis helped transfer government grants during the current covid-19 in a timely and transparent manner. In the interest of customer convenience, and to take advantage of the availability of Real-Time Gross Settlement (RTGS) every day of the year, it is proposed to make NACH available every day of the week throughout of the year, starting August 1, “It said.
In May, NACH was used for 406.6 million debit and credit transactions, according to RBI data.
âThis move is a welcome move that will improve the investor experience and allow faster processing times for salaries, dividends and pension distributions. The financial and banking industry as a whole will benefit, as will the millions of NACH beneficiaries who will receive their respective benefits quickly and with minimal delay, âsaid Rajesh Mirjankar, Managing Director and CEO of fintech solutions provider InfrasoftTech.
In addition, the availability of NACH on a daily basis will now allow industries to take greater advantage of electronic payment methods. It is also imperative to note that digital payments will have more impact when all electronic payment methods are available every day, he added.
Experts pointed out that the new rule will significantly reduce the time to register systematic investment plans (SIPs) that act as automatic debit mandates for mutual fund investments.
According to mutual fund distributors, it currently takes two to three weeks to register SIPs through NACH. Speed ââdepends on the investor’s bank, with some smaller or nationalized banks taking longer to register.
This will accelerate with the new RBI rules, experts say.
âDaily NACH processing will reduce SIP registration processing time and improve the investor experience. There will also be less pooling of SIP start and cycle days, âsaid Ganesh Ram, managing director of Mutual Fund Utilities (MFU), an online investment platform for mutual funds.
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