What is the full form of NACH?
NACH: National Automated Clearing House Payment Solution
NACH stands for National Automated Clearing House Payment Solution. It is a centralised internet-based payment solution or electronic clearing system. It was introduced to help the corporate sectors, and financial institutions like banks to handle bulk payments. It helps in making big transactions like salaries paid by the companies, payment of dividends, subsidies, and pensions by the government. It also helps the financial institutions in receiving big amounts such as electricity bills, telephone bills, loan payments, etc.
It was introduced by National Payment Corporation of India (NPCI) to facilitate the electronic transfers for bulk volume payments. It allows electronic transfer of funds across the nation irrespective of the geographical location. NACH is a part of NPCI (national payment corporation of India) that was set up in 2005 with the recommendation of RBI to encourage Retail Payment System in the nation.
Objectives of NACH:
It was introduced to provide end-to-end processing of mass electronic payments with the following objectives:
It is an electronic payment service controlled by the Reserve Bank of India to make bulk payment by the corporate sectors and other such organization. Any organization that follows the guidelines of RBI can make bulk payments through NACH Credit such as payment to bank accounts of employees, and pension, dividends, and subsidies are also credited to beneficiaries through NACH Credit system through a single system.
The key features of NACH Credit are as follows:
This service of NACH enables banks and other financial institutions to accept a large amount of payment without the involvement of the third party. It is used to collect bulk payments like electricity bills, EMI, loans, tax, and more.
The Key Features of NACH Debit are as follows:
Benefits of NACH for a consumer:
Benefits of NACH for an Organization:
Benefits of NACH for a bank: