NACH or the National Automated Clearing House is an easy solution for making timely payments. It helps customers make hassle-free payments through an automated system. For students who have availed education loans to study abroad or in India, it is very important to understand what exactly NACH is and how it is applied to the savings account. In this blog we will be discussing NACH, the full form of NACH, and how it can help you make easy transactions and loan repayments.
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What is the Full Form of NACH?
The full form of NACH is the National Automated Clearing House. It is a service which provides an automated system for clearing funds. This creates a mandate for repetitive payments to be auto-debited from the user’s bank account.
NACH was created by the National Payments Corporation of India (NPCI) for easy completion of payments in bulk. This helps reduce the time it takes to make each payment generated manually and also maintains the punctuality of loan repayment. A student can use NACH to make recurring payments like education loan EMI and utility bills.
Also Read: Planning to study abroad? Check out the Study Abroad: Do’s and Don’ts for International Student Account
How Does NACH Work?
As a customer when you approach your banks or financial institutions with the request of getting your NACH, you receive a NACH mandate form (also known as the one-time registration form). On filling out the form you provide the bank or lender authority to debit from your account a certain amount yearly, monthly, or weekly (as applicable).
The company verifies this form and is then sent for approval to your respective bank. The bank then forwards it to NPCI via the Mandate Management System. NPCI validates your form and then sent back to your bank for final verification of your account number and signature.
On approval, you receive a message intimating you about the activation of your account. The sponsor bank then gets your details along with the UMRN (Unique Mandate Reference Number), which allows your company to debit funds from your account.
Also Read: Are you applying for education loans? If yes, know about the 10 Mistakes to Avoid While Applying for an Education Loan.
Benefits of NACH for Students
There is no denying that a student’s life can be hectic. Students need easy, time efficient and trustable options as solutions to their problems. When it comes to clearing funds NACH can serve students with its user-friendly automated system. Mentioned below are the few ways NACH helps students.
Removal of Manual Process
NACH helps remove the manual process where a customer would have to make each payment. On top of that to avail the NACH system you can easily register online. Before we had NACH we had ECS (Electronic Clearing Service) which required physical mandate forms. NACH on the other hand is completely web-based with computer-assisted systems and requires very little or no paperwork.
Guarantees Timely Transactions
NACH guarantees timely payment for loans and others. NACH is completely automated and can easily ensure timely payments. Students can leave it to the system to make repetitive payments as there is no scope for errors to occur once NACH is set properly. However, you should always keep the account funded so that NACH transactions can be completed timely.
Trustworthy
Even though NACH leaves no room for errors, the system has its framework for dealing with disputes. It also provides day-to-day settlement of payments which makes it a trustable source. You will get real-time updates for any credit or debit transactions and this way you will be able to keep a record of loan repayment.
Easy Tracking of Payments
With NACH students can easily track their payments. All you have to do is enter your credentials into the banking partner’s portal. On doing so you will easily get access to details regarding your payment. This way a student can keep tabs on the flow of transactions.
How to Apply NACH?
If you wish to set up your very own NACH system you need to first get yourself registered. The bank will then check your information and based on that either proceed or reject your verification process.
NACH allows you to apply online by directly contacting your bank or using Net Banking credentials. All you have to do is go online and fill out a form. Follow the given steps to register for NACH :
- Step 1: Sign into your Net Banking account.
- Step 2: After logging in look for the Service button on the main page and then click to open.
- Step 3: Under Services, you will find an option for e-NACH Mandates. Click on it to proceed.
- Step 4: The next step is to click on e-NACH registration which will take you to the form.
- Step 5: Enter all your details and submit the form.
FAQs on National Automated Clearing House
National Automated Clearing House (NACH) is an automated system that offers hassle-free clearing of funds in bulk. It provides you with a mandate for repetitive payments to be auto-debited from the user’s account.
NACH is used to make payments in bulk. It guarantees time-efficient and easy completion of repetitive payments.
Yes. A mandate can be easily cancelled online. Your bank account has the option of deleting the mandate and on deleting it takes a total of 4 days for the cancellation to proceed.
HDFC Bank, ICICI Bank, CitiBank, State Bank of India etc are associated with the NACH system.
UMRN stands for Unique Mandate Reference Number. It is used by the company to debit your funds. UMRN is also used for mandated amendment and cancellation.
This was all about NACH and how it can work towards easing a student’s life. Setting up a NACH system is very easy and can be done online. Students should thus apply for NACH to make their lives hassle-free.
To know more about education loans, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
