Soon you can pay SIPs and bills instantly as RBI says NACH will be available on all days starting August 1 

The size of the RBI’s balance sheet increased by Rs 3.73 lakh crore, or 6.99 per cent, to Rs 57.08 lakh crore as on March 31, 2021 from Rs 53.35 lakh crore as on June 30, 2020.

Upping the ante on its developmental guidelines, RBI (Reserve Bank of India) stated that the NACH system(National Automated Clearing House), operated by NPCI (National Payments Corporation of India) will now be functional all days of the week, effective August 1, 2021. The decision, made during RBI's bi-monthly monetary policy announcement was made in order to enhance customer convenience, said RBI Governor Shaktikanta Das. 

Currently, NACH is available only on days when banks are open and functioning. This means that auto-debit instructions are not processed during bank holidays, gazetted holidays, and even Sundays. And since this system is widely used for DBT (Direct Benefit Transfers) and salary payments, these processes are halted during such times. 

As per the statement released by RBI, “NACH is currently available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, it is proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021.”

What is NACH? 

The National Automated Clearing House, managed by NPCI, is the foundation of one to multiple credit transfers. So, be it dispersal for interest, dividend, salary, and pensions, most business entities rely on this system for regular, mass payments. 

In addition, the system also facilitates bill payments for utilities like water, electricity, and more, along with paying off loan installments, SIPs, insurance premiums, and more. Once NACH receives standing instructions, customers are no longer required to issue monthly cheques, since money is automatically deducted from their account. 

This announcement will bring forth markedly shorter processing durations for SIP payments, salary credits, bill payoffs, and loan EMIs, which were earlier delayed due to bank holidays. However, customers should take care to maintain a minimum balance in their accounts at all times and not just on days when banks are working starting August 1, 2021 for completing their auto-debit transactions. Failure to do so would attract penalties. 

In his statement, RBI Governor Shaktikanta Das reiterated the significance of NACH, stating that “NACH has emerged as a popular and prominent digital mode of direct benefit transfer (DBT) to a large number of beneficiaries. This has helped the transfer of government subsidies during the present COVID-19 in a timely and transparent manner. 

Auto-Debit figures stabilising 

According to the National Automated Clearing House (NACH) data, in April 34.05 percent of auto-debit transactions in volume terms failed, which means almost 29.08 million transactions out of 85.4 million initiated transactions were unsuccessful. 

May’21 has been a solid month, with the volume of transactions surpassing Rs 4,900 million and the cumulative value of these transactions exceeding Rs 16,900 billion. Trends suggest that auto-debit failures have been steadily falling since December 2020, an indication that people are sufficiently well off to pay their bills on time.