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What is NACH Cancellation?

National Automatic Clearing House (NACH) is an interbank payment system that is used for transferring payments in cases of bulky, frequent, or high-volume transfers. NACH works by providing for a mandate that allows an institution to debit or credit money from an individual’s account. For NACH to work, the individual must first register the mandate, which is to say, authorise the institution to debit or credit money from their debit cards or credit cards. In a few scenarios, a customer might want to cancel the mandate. Read on to learn more about the NACH Mandate Cancellation process.

When Can a Customer Cancel NACH Mandate?

Suppose you have taken a loan from your bank that you are now required to repay in EMIs. You can pay your EMIs in two ways - either manually make the EMI payment each month or authorise the bank to automatically debit the EMI amount from your account each month. In the second case, you would first need to register a NACH mandate. However, if after giving the NACH mandate, suppose you now want to stop the bank from automatically debiting the EMI amount from your account. In this case you would want to opt for NACH mandate cancellation. NACH cancellation is needed not just in case of loans but in case of any other service in which money is being automatically debited from your account by an institution such as when paying utility bills

How to Cancel NACH Mandate?

The cancellation of a NACH mandate is a straightforward process. If a customer needs to withdraw or cancel a mandate, he or she can do so by contacting the user institution and requesting that the mandate be canceled. The account holder/client can also remove the mandate/debit instruction straight from his/her banker, bypassing the user institution. In such instances, a customer's withdrawal instructions would be considered as a "stop payment" instruction in the cheque clearing system.

The RBI publicly stated that you can approach your bank or other institution to which you have provided such NACH mandate, meaning the lender of your bank, electricity board, water board, mutual fund company, or any organization to which you have authorized to collect the money from your bank account.

A few Mutual Funds, Banks, or Stock Brokers allow you to cancel your NACH mandate cancellation request online. However, there are many that do not provide such services, making it difficult for you to cancel your mandate. In this case, approaching your bank and requesting NACH cancellation is the best option.

How to fill the NACH Mandate Cancellation Form?

These are the set of instructions to be followed to fill the NACH mandate cancellation form:

  1. Fill in the Date: In the format DD/MM/YYYY

  2. To create, edit, or cancel the mandate, select the appropriate checkbox.

  3. Type of bank account: Check the appropriate box according to the type of bank account you possess/.

  4. Enter your bank account number.

  5. Enter the name of Destination Bank.

  6. IFSC / MICR code: Fill in the respective code.

  7. Mention the amount of the mandate.

  8. Select frequency of mandate.

  9. Choose whether the mandate amount is a fixed or a maximum amount.

  10. Reference 1: Mention Folio Number

  11. Reference 2: Mention Application Number

  12. Provide your telephone number (Optional)

  13. Provide your Email ID (Optional)

  14. Period: Here you need to provide the starting and ending dates of NACH registration (in format DD/MM/YYYY). If you choose a perpetual SIP, leave the end date blank and choose "until canceled."

  15. Signature as per bank account.

  16. Name: Mention The Holder’s Name as Per Bank Record

This is the process of filling up the NACH mandate cancellation form.

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FAQs About NACH Mandate Cancellation

✔️What is the NACH Cancellation request?

The NACH (National Automated Clearing House) is a funds clearing platform similar to the existing ECS (Electronic Clearing System) that allows for bulk and voluminous interbank payments quickly. A NACH mandate needs to be registered in case you want payments to be credited to or debited from your account. NACH Cancellation requests are used to cancel automatic debits from your bank accounts such as in case of EMI from loan being debited by a bank or utility bills getting debited. 

✔️When can a customer cancel a NACH?

A customer needs to cancel the NACH mandate in cases where they want to stop automatic debit of money from their accounts such as in cases of EMI payment to banks or payments of utility bills.

✔️Are there any fees for NACH cancellation?

No, there are no fees associated with NACH cancellation.

✔️How to cancel my NACH mandate?

NACH mandate can be cancelled by filling in the above-mentioned application and submitting it to either your destination bank or NACH mandate provider.