Is it possible to shorten the time it takes to process SIP registrations? Yes, you can use the e-NACH mandate function to make a Systematic Investment Payment (SIP). This feature, also known as One Time Mandate (OTM), makes the registration and following transaction procedure for SIP investments a breeze.
You may transact in a safe and paperless manner after OTM has been appropriately enabled without having to sign several checks or knock on the registrar’s door.
What is the e-NACH Mandate?
The National Automated Clearing House is an acronym for National Automated Clearing House. It refers to a system that automates payments from an investor’s bank account, making the entire investing process easier. The investor must provide the mutual funds with a one-time mandate by authorising a modest payment using the net banking interface from their bank account.
NACH is run by the National Payments Corporation of India (NPCI), allowing organisations such as mutual funds to accept payments on a one-time basis (OTM). For example, if an investor registers OTM with UTI Mutual Fund, the NACH mandate would automatically remove funds from the investor’s bank account, automating the investing process.
A mandate like this can be utilised to invest in the mutual fund scheme of the investor’s choice. As a result, the NACH mandate enables investors to invest in mutual funds without dealing with paper.
E-NACH Mandate for SIP Investments
- Only mutual fund investors holding the funds in a single mode are eligible for this service. Joint mode mutual fund investors are now unable to use the E-Mandate feature.
- The e-NACH Mandate must be signed and authenticated electronically using Aadhaar. It’s essential to double-check that the cellphone number used to register for the mandate is the same as the one used for Aadhaar. Aadhaar validation is also required for the bank mandate submitted for the mandate.
- Only banks that the National Payments Corporation has approved of India can use the e-NACH Mandate function (NPCI). This should not be an issue because the bulk of India’s significant banks is already NPCI-registered.
- Currently, the highest amount that may be invested regularly via the E-Mandate option is Rs. 1 lakh.
The procedure of the e-NACH Mandate for SIP Investments
- This service is provided exclusively to mutual fund investors who hold their funds in a single mode. As of today, joint-mode mutual fund holders cannot use the E-Mandate service.
- Aadhar must sign and validate the E-Mandate electronically. You must confirm that the cellphone number used to register for the E-Mandate matches the one used for Aadhar. Additionally, the bank mandate you supply for the E-Mandate must be Aadhar validated. Otherwise, the E-Mandate will be impossible to complete.
- Before filing for an E-Mandate, double-check that the PAN number you’re providing for your MF investment is likewise linked to your bank mandate. Your PAN must also be linked to your Aadhar number; else, the application may fail.
Advantages of e-NACH Mandate
- There are no physical forms or signatures necessary during the procedure because it is entirely digital. Before applying for the E-Mandate, you only need to take care of the Aadhar data and mapping.
- Within 2-3 days, the E-Mandate will be registered, and you will be able to start your SIP in less than 7 days. This is a significant improvement over the current method, which takes about a month to register a SIP.
- Mutual fund sellers and distributors will have an easier time with this since they will spend less time and energy going through normal physical activities.
NACH is a more long-term solution than prior bulk payment systems like ECS. The NACH steering group includes India’s biggest banks, making it more inclusive than other systems. It also symbolises the mission of the organisations that its activities will impact. As a result, an open system like NACH is unquestionably one of the most important financial sector reforms. It has simplified India’s payment environment, which is now ready to handle a large number of digital transactions in the coming years.