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NACH Form mandatory for New SIP Registrations


National Automated Clearing House (NACH) is a one-time registration process which allows an investor to make lump sum / SIP investments in mutual funds. NACH is a centralized and improved clearing service.

National Payments Corporation of India (NPCI) recently issued a circular (Ref. Number NPCI/2015-16/NACH/Circular No 148 dated 5th February 2016) to participating banks to stop accepting Electronic Clearing Service (ECS) mandates effective from 1/3/2016.

NACH of the NPCI is a web solution to facilitate interbank, high volume, electronic transactions which are repetitive and also periodic in nature. NACH System can also be used for administering bulk transactions towards distribution of dividends in MF parlance and various other bulk payments like salaries, interest and so on. It can also be used for making bill payments, etc. NACH is being implemented owing to these distinct advantages - standardization and digitization of mandates, simplification, minimal activation time and so on.

Coming to new MF investors, there would be no change / impact except that the NACH Form (One Time mandate) replaces the ECS form. Existing ECS mandates will be converted to NACH. However, Auto Debit as a mode will be available.


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