Definition
NACH and ECS Mandate
NACH (which replaced ECS) is a system for automated, recurring bulk payments and collections like SIPs, EMIs and salary credits.
National Automated Clearing House (NACH), operated by the NPCI, handles recurring, bulk transactions — crediting salaries, dividends and subsidies, and debiting SIPs, loan EMIs, insurance premiums and utility bills. It modernised and largely replaced the older ECS system.
To allow automatic debits, you sign a NACH mandate (e-mandate) authorising the institution to pull a set amount from your account on schedule. You can register, amend or cancel mandates through your bank.
For mutual-fund SIPs and loan repayments, the NACH mandate ensures payments happen on time without manual effort. A failed NACH debit due to insufficient balance can attract charges and, for loans, hurt your credit record.
Related terms
- UPI (Unified Payments Interface)UPI is India's instant real-time payment system that links bank accounts to a single mobile app for sending and receiving money.
- EMI (Equated Monthly Instalment)An EMI is the fixed monthly payment you make to repay a loan, combining both principal and interest.
- Credit Score (CIBIL)A credit score, popularly called a CIBIL score in India, is a 300-900 number that reflects how reliably you repay loans and credit-card dues.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.