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NACH Charges Meaning

The NACH (National Automated Clearing House) mandate charge is the amount NPCI charges towards completing a transaction. NACH was introduced by the RBI (Reserve Bank of India) to function as a centralised interface that allowed repetitive, bulk money transfer, irrespective of geographic distances. NACH is useful for timely salary disbursal, EMIs payments, auto-debit payments, pensions, subsidies, interests, dividends etc.

What are the NACH Charges?

NPCI or the National Payments Corporation of India operates and monitors the NACH framework. NPCI charges a nominal amount from banks and financial organisations in lieu of the service. The charge depends on the transaction volume. In case of any changes to it, a circular is issued. The common charges levied by the NPCI are mentioned below. Do note that in the case of Income Tax refunds, NACH mandate charges are not applicable.

1) Processing Fee and Incentive for Credit Transactions (Direct Benefit Transfers (DBT))

 

Product

On- us

Off- us

Aadhaar based transactions- Credit

₹0.15

₹0.40

ACH credit

₹0.15

₹0.40

 

In case of Off-us transactions, the interchange of ₹0.25 will be passed on to the destination bank. The NPCI charges are ₹0.15 (off-us) and ₹0.15 (on-us). Charges are applicable irrespective of acceptance or rejection by the destination bank.

2) Processing Fee for Credit Transactions (Other than DBT)

Product

On- us

Off- us

Account-based- ACH credit

₹0.05

₹0.45

 

In case of Off-us transactions, the interchange of ₹0.25 will be passed on to the destination bank. The NPCI charges are ₹0.20 (off-us) and ₹0.05 (on-us). Charges are applicable irrespective of acceptance or rejection by the destination bank.

3) Processing Fee and Penalty on Debit Transactions

Product

On- us

Off- us

ACH Debit

₹0.05

₹0.70

NACH Debit

₹0.05

₹0.70

 

In case of Off-us transactions, the interchange of ₹0.50 will be passed on to the destination bank. The NPCI charges are ₹0.20 (off-us) and ₹0.05 (on-us). Charges are applicable irrespective of acceptance or rejection by the destination bank.

Penalty amount

Applicable if the below-mentioned errors have occurred more than two times by the same bank.

 

Issue

Penalty Amount

NACH Debit (306)

“Account closed’ and “no such account”

₹25 per instance since 3rd instance

NACH Debit (ECS)

“Account closed”

₹25 per instance since 3rd instance

 

4) Processing Fee, Incentive and Penalty on Mandate

Sponsor Bank

Processing fee

₹1.00

₹5.00 (Incentive)

Destination Bank

Processing fee

₹0.50

₹10.00 (Penalty)

The processing fee is applicable on initiation, cancellation as well as an amendment. The incentive is passed to the destination bank and the penalty is passed on to the sponsor bank. The destination and the sponsor bank have to pay the processing fee to the NPCI. The details are mentioned below:

Incentive for up to ₹3 lakhs

Processed within 7 working days

₹5 per mandate

Processed after 7 working days

No incentive

Incentive above ₹3 lakhs

Processed within 10 working days

₹5 per mandate

Penalty

Mandates pending after 10 working days

₹10,000 per mandate

 

5) Processing Fee and Incentive for E-Mandate

Sponsor Bank

Processing fee

₹0.50

₹5.00 (Incentive)

Destination Bank

Processing fee

₹0.50

₹10.00 (Penalty)

 

The processing fee is applicable on initiation, cancellation as well as amendment. Incentive is passed to the destination bank and penalty is passed on to the sponsor bank. The destination and the sponsor bank have to pay the processing fee to the NPCI. The details are mentioned below:

Incentive for up to ₹3 lakhs

Processed within 2 working days

₹5 per mandate

Processed after 2 working days

No incentive

Penalty

Mandates pending after 10 working days

₹10,000 per mandate

 

Some of the top banks offering NACH services are State Bank of India, Citibank, HDFC Bank, ICICI Bank, etc.

What are the Bank-wise NACH Charges?

NACH bank charges depend on the bank’s terms of service and its agreement with NPCI. You can contact your bank and know the details. Some of the top banks offering NACH services are State Bank of India (SBI), Citibank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, etc. The amount charged by these banks is listed below:

Bank Name

Details

Amount

Axis Bank

ECS/NACH transaction fee per transaction

₹25 (max- ₹100/month)

SBI

One time Mandate Authorisation

Charges per mandate

₹50 + GST

HDFC Bank

One time Mandate Authorisation Charges per mandate

₹40

₹36 for Senior citizen

Kotak Mahindra Bank

One time Mandate Authorisation Charges per mandate

₹50

ICICI Bank

One time Mandate Authorisation Charges per mandate

₹50

 

Where is NACH Used?

NACH is useful for individuals, corporations, the government sector, non-banking financial organisations, and banks. It reduces the time taken in processing money and settling bills and makes the process safer. NACH is used in the following scenarios:

  • Mass Money Transfer: NACH mandate is a safe and traceable option for anyone who wants to make bulk transfers. The money gets processed real quick without the need for any tedious paperwork.
  • Salary Disbursal: It's estimated that more than 70% of transactions today are conducted online. Companies are increasingly relying on the NACH mandate to transfer the monthly salaries of their staff.
  • Enhanced Transparency: NACH has made money transfer and debits totally transparent and safe. Transactions occur within the NPCI firewall and you are notified about the transaction status at all times.
  • EMI Auto-Debit: Individuals can get their monthly EMI amount auto-deducted from their bank accounts on a certain date.
  • Instant Loans: Financial organisations that process loans online after quick document verification, leverage NACH services the loan amount within 1-2 working days.

NACH is quite useful when it comes to the bulk processing of transactions. It saves time, effort, paperwork and the process is also highly secure and user-friendly. With the help of the NACH mandate, it’s become easier to avail loans online. If you are looking for a low-interest personal loan, then Finserv MARKETS has got some attractive loan options with flexible repayment. You can also apply for a credit card on the portal from some of the top banks in the country.

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FAQs

✔️What is NACH amount?

The amount that is credited or debited in each transaction is the NACH mandate amount. Individuals have the option of setting the maximum NACH debit amount that can be automatically debited. The bank won’t be empowered to deduct any amount higher than that specified in any case.

✔️What is NACH Utility Code?

Utility Code is the corporate user ID. It's a special user identification number provided by the NPCI within 2 working days. There can be numerous user numbers if there are multiple banks providing NACH facility.

✔️What’s an ACH Transfer?

Also known as direct deposit, ACH transfer is the way to send money from one bank account to another using the NACH network. Once the sender makes a request, the transaction is initiated and money is transferred to the other bank account. ACH stands for Automated Clearing House. Nominal NACH mandate charges are applicable in ACH transfer.