NACH (National Automated Clearing House)- Every thing you should know
Recently, following RBI Guidelines, LIC has shifted to NACH (National Automated Clearing House) from ECS (Electronic Clearing Service) for its electronic mode of automatic premium deduction through banks. NACH is a centralised bulk file based transaction processing system, specially designed to facilitate and efficiently manage large volume of collection in retail payment systems.
NACH is facilitated through newly formulated NPCI (National Payment Corporation of India). NPCI is a body formulated by Reserve Bank of India( RBI) in conjunction with Indian Banks Association and 10 promoter banks.
NACH vs ECS a quick comparison
ECS(Electronic Clearance ServiceNACH(National Automated Clearing House)
View this video to get a clear Idea of NACH process.
NACH automated work flow – simplified
A proper understanding of the steps involved in the NACH process will help you to complete the process successfully. The info-gram provided here can help you to understand the complete work flow of the NACH mandate registration process.
NACH Automated Work Flow – Simplified
NACH process work flow – Summary
- Customers can commence policies under NACH in Yearly, Half yearly, Quarterly or Monthly mode. (Two monthly premiums are to be paid for Monthly mode.) NACH mandate form and the proposal form is submitted at the Branch Office.
- New business Department of the Branch completes the proposal and fills the Policy number, Premium and some other details in the mandate form.
- Completed mandate form is submitted to Divisional Office – New Business department. Which in turn will hand it over to the Sponsor bank on a day to day basis.
- Sponsor bank scans the mandate form and uploads it to National Payment Corporation of India (NPCI) server.
- NPCI sends the mandates for processing to customer’s bank (destination Bank).
- Signature and the account details are verified by the bank. Mandate accepted/rejected status message along with reason code for rejection is send back to NPCI server.
- NPCI server send the details of the NACH Mandate (Accepted/Rejected) to NACH centre.
- NACH centre merges the Acceptance/Rejection details of NACH mandates in to ECS masters.
- Invoice is registered few days before next due date by NACH centre.
- Deduction from bank takes place on the due date based on the invoice.
Deduction Dates for NACH
| Date of Commencement | NACH Debit Date |
|---|---|
| 1 st to 7 th | 7 th of due month |
| 8 th to 15 th | 15 th of due month |
| 16 th to 22 nd | 22 nd of due month |
| 23 rd to 28 th | 28 th of due month |
How to Properly Fill NACH Mandate Form To Avoid Rejection.
Mistakes and improper filling of Mandate form makes it liable to rejection, which in turn will result in failed premium deduction. Mandate form is designed to be be filled in three stages. Follow my Mandate Filling Guide to make the filling process simple and error free.
1. Details to be filled by the customer.
Things to remember:
- Signature should be as in account holders bank records. (1)
- Only one signature is required for normal accounts. (2)
- For Joint Accounts and accounts of firms, signature of other account holders also will be necessary.
- Name of the account holder should tally with name in the Bank Passbook/Cheque leaf (3)
- Mention the correct account type in space provided (4)
2. Details to be filled by New Business department of Branch
3. NACH – Details to be filled by Divisional NB
Most of the details to be filled by the divisional new business department will be pre-printed in the mandate form. Divisional code, utility code, sponsor banker’s code etc should be available in the mandate before it is handed over to sponsor bank.
Common NACH mandate rejection codes and reasons for rejection.
NACH mandates can get rejected at various stages of the automated mandate registration process, owing to a variety of reasons. When a mandate get rejected, customer and the agent will get a mobile SMS alert and the rectification has to be initiated accordingly. It is always advised to be proactive in knowing the status of the mandates. The best method to track the status of mandate is through the PCMC site available at intranet of LIC.
Download the complete list of NACH rejection codes and reasons for rejection from here.
Signature (1 – 10)
M003 Drawers signature differs
M004 Drawers signature required
M005 Drawers signature to operate account not received
M006 Drawers authority to operate account not received
M007 Alterations require drawer’s authentication
M008 Company ‘FOR’ stamp required
Stop Payment (11 – 20)
M011 Payment stopped by attachment order
M012 Payment stopped by court order
M013 Withdrawal stopped owing to death of account holder
M014 Withdrawal stopped owing to lunacy of account holder
M015 Withdrawal stopped owing to insolvency of account holder
Instrument (21-35)
M024 Amount in words and figures differ
M027 Image not clear
Account (36-45)
M037 Account closed
M038 No such account
M041 Account blocked
M042 Account description does not tally
M043 Nature of debit not allowed in A/c type
Miscellaneous (56-75)
M057 Payer Name Mismatch
M058 Name of beneficiary not provided or not legible
M060 Invalid Frequency
M061 Frequency of payment not mentioned on mandate
M062 Period of validity not mentioned or invalid end date
M063 Invalid Bank Name
M072 Data mismatch with mandate
M073 Mandate Incomplete
M065 Fixed’ or ‘Maximum’ option not specified on mandate
Combination (76-85)
M076 Data Mismatch: Frequency and Period
M077 Data Mismatch: Frequency and Signature
M078 Data Mismatch: Period and Signature
M079 Data Mismatch: Debit Type and Signature
Sponsor Bank Rejects (86-95)
M086 SP_Customer identifier mismatch
M087 SP_Incorrect amount
Amendment
A001 On Customer request
Cancellation
C001 On Customer request
C002 On Corporate request
C003 Account Closed or Frozen or Inoperative
Acceptance
ac01 Default Ack Accept Reason
NPCI system generated
sack Automatic cancel request acceptance
ncfe Default forced not acknowledge acceptance reason
ncex TAT Expired
What to do if NACH mandate is rejected?
If your mandate gets rejected, what so ever may the reason, there is no need to get panic, as there are well defined methods to rectify each and every rejection reason. First thing to do is find the rejection code. Rejection code will direct you to the rectification process which has to be initiated. Most of the rejection problems can be rectified by resubmitting fresh mandate form.
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What should be ‘From Date’ in following case? Proposal is completed on 28th Feb and as it is dated back from 1st Feb, commencement date is 01.02.2017.
Date of commencement will be 01/02/2017. as you have mentioned..
Sir,
The Loan account is in by brother’s name but the ECS debit account is in mine.The first EMI got rejected due to “Payer name mismatch” I contacted the bank that provided the loan and they asked me to submit the ACH mandate form.If I submit it , will it get rejected again due to Payer Name mismatch ?
Is the Loan account name permitted to be different from the debiting account name ?
Loan account and payer name can be different but only thing is that it should be properly updated in the mandate during the registration process. Name in the NACH and registered in the module must be same. Please submit mandate form after correcting the payer name in the records first.
I received a message from the bank from where I took the loan saying – “Nach mandate registration toward loan account has been rejected by Bank due to reason drawers signature differs. The same will be re-loadged with your bank”.
After one day. I received message saying – “Your security NACH mandate towards loan has been sent for registration. Please request your bank to register the mandate. Mandate will be presented only if the EMI is not paid”
Not sure what should I do?
The message you received is not from LIC as the account cannot be a loan account and debit is not for EMI in case of NACH policies.
dear sir
thise is ajay kanojiya from finance co. we just know that nagrik sahakari bank active in NACH manded?… because when i send manded (nagrik sahakari bank ) to our bank the bank will rejected initial level due to M9 – Bank Not Particitpating In Ach Debit;M8 – Bank And Micr/Ifsc Mismatch… we checke properly the data will proper as per customer pass book… please suggest what we do for nagarik bank NACH registration