written by Khatabook | August 23, 2021

A Complete Guide to NACH e-mandate

NPCI has introduced the "National Automated Clearing House" (NACH), a payment service for businesses to collect recurring payments in India. This process has also been initiated by NPCI along with the Reserve Bank of India (RBI). The e-Nach or e-Mandate is basically an internet solution that is useful for Banks, Financial Institutions, and various Corporations for collecting recurring payments. It aids in interbank (transfer of loan, deposit, amount between two or more banks), high-volume, repetitive and periodic electronic transactions through the Nationwide Payments Corporation of India. 

Let’s decode everything about the NACH mandate in this article. 

What is the NACH mandate?

NACH is a centralised payment system initiated to consolidate multiple Electronic Clearance Service (ECS) structures. This creates a basis for standard and practises harmonisation and for removing local barriers/inhibitors which come in manual payment process. The NACH mandate provides a national footprint. It is anticipated that it will extend to all of the core banking allowed bank branches all over the country, regardless of the branch location. 

The NPCI aims to provide a set of ground rules (operating and business), open standards, and best practices in the industry for online transactions common to any participants, service providers and users, etc. This is done with the execution of e-NACH. The system of e-NACH also provides government, government agencies and Financial Inclusion through Aadhaar-based transactions. It provides a basic infrastructure for recurring businesses payment in India.

The system of e-NACH contributes to the development of the products of the member banks. It addresses the special needs of banks and companies, including a polished Mandate Management System (MMS) and online Dispute Management System (DMS) with strong communication of knowledge and customised Management Information Systems (MIS).

The e-mandate aids students with payment and file-based transaction processing capacity with a secure and scalable platform. This is because, through the Nach mandate, recurring payments can be conducted. Therefore, students can use this mandate to pay EMI for student loans, etc. It also offers the best security features, cost-effectiveness and payment performance (using a Straight-through Processing mechanism) combined with the country-wide multi-level data validation facility.

What is the use of the NACH mandate?

  • NACH mandate helps in the process of easy electronic payments since it uses a centralised framework across all banks in India. 
  • Government departments or Corporate offices are able to do bulk payments with ease through this e-mandate because of this framework. 
  • It is useful since it has a structured control system that helps in resolving issues regarding settlement, payment disputes etc catering to online banking. 
  • Mass transactions for collecting payments related to telephone, electricity, water, loans, mutual funds investment, insurance premiums etc. 
  • NACH mandate has 2 parts: NACH Credit and NACH Debit.
  • NACH Credit: 
    • It helps in making huge payments to the bank account of multiple benefits. 
    • It is useful for large corporations in distributing subsidies, dividends, interest, wages, and pensions. 
  • NACH Debit:
    • Banks and financial institutions can use this to collect large volumes of payment. 
    • Loan or EMIs can be automatically collected through its auto-debit feature.  

NACH For Common People

NACH is a payment system for recurring payments such as school fees or corporate payments, SIP, mutual funds, etc. However, before the introduction of the NACH mandate, Electronic Clearing Service or ECS was used for the same purpose. 

After identifying the importance of the NACH mandate, the next essential question is why NACH is required if ECS is already there. You can understand this through a comparison. 




  • The ECS is a manual system that takes time and effort to verify.
  • In ECS, there is no unique mandate reference number, so it can be difficult to use it in future.
  • ECS involves a lot of paperwork, so the rejection rate is also high, increasing the processing time.
  • ECS takes 3-4 days for the payment to get settled.
  • ECS has no dispute management system
  • ECS registration may take as long as 30 days
  • In NACH, the flow of work is defined, which helps in saving a lot of time.
  • NACH mandate provides a unique NACH reference number for registering that you could use in the future.
  • NACH mandate involves much less paperwork and a lower rejection rate, so less time is taken for the process.
  • This e-mandate takes only a few hours to get the payment settled.
  • NACH has a dispute management system that solves problems quickly.
  • NACH registration takes a maximum of 15 days.

Also Read: Real-Time Gross Settlement (RTGS) - Definition, Understanding & Why RTGS s Important?

How Does NACH mandate Work?

NACH mandate uses Aadhaar card or PAN card to link the e-NACH. In this way, the details of loans, EMI etc., are given in e-format with scans of documents for proof using the Aadhaar or Pan Card no. Moreover, the paperwork was taken out of the system and the documents of customers were directly input into the system from the government records. Therefore, there was no need for a separate verification process. 

The working process of the NACH mandate is as follows:

  • The e-mandate form is provided to Party A, such as the customers, so that they are able to make recurring payments to Party B, such as money-collecting agencies. 
  • This form is submitted to Party B by Party A where all details of loans, EMI etc are verified. 
  • After verification is completed, Party B forwards the NACH mandate to the bank with NPCI.
  • After verification of e-NACH, Party A’s bank is enabled for easy payment of EMI through the auto-deduction process. 
  • With Party A’s bank approval of the mandate, the repeat payments can be made to Party B from Party A’s account.  
  • Party A can stop the NACH at any point in time by just submitting a cancellation form. However, not all banks, mutual fund companies allow the cancellation.

Below is a visual representation of the process:

Now to see how it works, let's take an example of a school collecting fees from a child's parent:

  • The company or agency that collects money, or in our case the school, collects an e-mandate form from the customers or, in our case, the parents of the child. With the NACH mandate, the child's parent gives the corporate or the school the debiting authority or account for a certain period and frequency.
  • Now the corporate or the school Verifies the customer's information in the NACH form.
  • Next, after the verification of details, the school forwards the NACH mandate to its bank.
  • The NPCI, after validating the information, forwards the NACH mandate to the child's parent's bank for approval.
  • Only valid transactions are transmitted to the parent's bank for monetary debit.
  • Once the parent's bank approves the mandate, the school is permitted to receive funds from the consideration of the client or the parent.

Let's look at another example:

Suppose a man called Ramesh has invested in mutual funds and decides to put in Rs 10000 per month.

  • One option is that he manually puts the money, which is a tedious process since he needs to be present physically.
  • He can also do ECS, which is a lengthy process and can take up to 3-40 days of processing. And if there are mistakes in the ECS form or if documents are missing, there is a high chance of getting rejected. Due to this, people prefer virtual processes rather than manual ones. 
  • In this case, Ramesh can benefit from using th e NACH mandate since monthly deposits can be done through this process. Moreover, its auto-debit feature can aid in monthly deposit fulfilment of recurring payments since the payment is done automatically on fixed dates. 

Therefore, the tedious paper constrained and time taking process of ECS is made into a simple and easy mandate click.   

Benefits of NACH 

There are many benefits of the NACH mandate that need to be highlighted:

  • It helps the easy transfer of payment in India. 
  • Since the NACH mandate system is available throughout the nation, debit on the same day is possible. 
  • Its Auto-debit feature helps in the payment of EMI, taxes, bills or any other recurring payments without having to manually pay.
  • It has Security at multi-level measures so that all your money is safe. 
  • Its nationwide reach makes it cost-effective as well and provides the corporates with the scope of making bulk transactions.

Cases in which NACH mandate is rejected

  • The e-mandate application gets rejected if you enter incorrect information like bank number, folio number, etc.
  • NACH is also rejected in case the investor's bank isn't authorised with the NACH mandate.

Some of the key features of the e-NACH system are:

  • Robust system with high volume processing capacity- This means that the e-NACH system is much stronger and can handle high volume transactions, and won't crash on high traffic.
  • Cost-effective– Since the system is spread nationwide, the cost of the process reduces by a lot. 
  • Better liquidity management– Liquidity in financial terms is the flow of money. So, with e-NACH, better liquidity or money management can be maintained as per debt obligations.
  • One-stop shot for push (credit) and pull (debit) transactions– This is an excellent feature of the system, as it gives easy access to the users to come to one place for both credit and debit amounts. There is no need to go to different places, making the overall process easier.
  • Porting of corporate NACH mandate– You can easily shift the NACH mandate from one bank to other, and it doesn't take much time. 
  • Automated workflow (Host to Host connectivity)- All the banks are connected through NPCI, so communication is easy. This is the main reason why the process is much faster than the ECS. 
  • Response for all transactions for better reconciliation– Since NACH has a dispute management system for complaint compliance. So complaints are resolved in the least possible time.
  • Large network of banks-  And lastly, since almost all the banks are linked with NACH, there is a large network of banks where you can avail this e-mandate.

NACH e-mandate Application form

NACH Steering Committee List

Following is the list of banking institutions that are members of the NACH mandate system in India: 





































Also Read: NEFT: What It Is, Timings, and How to Initiate Transfer, Benefits


In this article, we have evaluated the usefulness and working features of the NACH mandate. E-NACH and e-mandates help in repeat payments, for example, telephone charges, insurance premiums, utility bills, SIPs, academic fees etc., making the payment process easy for traders and purchasers. For example, you are able to make your premium payments online instead of doing manual payments. The best aspect of this mandate is that you don’t have to remember to pay your EMIs, loans etc since its auto-debit features help in automatic money transfer. It has also made bulk payments easier and significantly secured. Therefore, no more worrying about untimely payments or late charges!

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What happens to an e-mandate if the sponsor bank to a mandate is blocked? 

The NACH remains active in the NPCI system even if it's blocked. However, the blocked sponsor bank will not be allowed to initiate transactions on the NACH.

Can a corporation initiate transactions from a sponsor bank not part of mandate registration?

No, a corporation cannot initiate a transaction from any sponsor bank as a matter of routine. This is possible only if porting of corporate organisations gets the existing mandates mapped to a new sponsor bank.

Corporate sponsor banks are currently blocked or disabled. Can corporate banks execute the portability option? 

Yes, corporate can use the portability option even if their current sponsor bank is blocked or disabled to map the NACHs to a new sponsor bank and initiate the transactions.

What new sponsor bank can perform actions once NACH is ported?

  • The new sponsor bank can initiate transactions of e-mandate registered with the old sponsor bank. However, amendment or cancellation of such mandates will not be allowed.
  • The corporate organisation can use a new sponsor bank to register or register subsequent mandates from customers to NPCI.

What are the documents to be submitted to NPCI for executing the portability? 

A corporate, through its new sponsor bank, has to submit a request to NPCI. The request should be duly authenticated by the new sponsor, with the authorised signatory signing all the pages and bank seal duly affixed—format provided in Annexure-I.

What is the fees/charge applicable for the portability? 

NPCI does not charge any fee for portability.

We are (Corporate) participating in API E-mandate by connecting to NPCI, and my sponsor bank is blocked. What should I do? 

A corporate organisation must agree with a new sponsor bank and submit the onboarding documents to NPCI to participate in the e-mandate platform. The sponsor bank should be participating in both the variants of the e-mandate platform (please refer to our Circular no.37 dated Dec 06, 2018)

What are the documents to be submitted to change the sponsor bank in API e-mandate

  • If the user number or utility code used by corporate in API e-mandate is already mapped to the new sponsor bank. Corporate has to submit “Corporate request e-mandate– Annexure-II” and “Sponsor bank letter – Annexure III”. The new sponsor should duly authenticate the request with the authorised signatory signing all the pages and bank seal duly affixed
  • If the corporate's user number or utility code in API e-mandate is not mapped to the new sponsor bank. Corporate has to submit “Corporate form – Annexure I”, “Corporate request e-mandate– Annexure-II” and “Sponsor bank letter - Annexure III”. The documents should contain the sign and seal of the authorised signatories on all pages. 10. 

Any change in API e-mandate request to be done after changing sponsor bank? 

All the new mandate requests should possess the details of the new sponsor bank

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