NPCI -National Payment Corporation Of India have recently issued circular and asked mutual funds to migrate from ECS – Electronics Clearing System to NACH registration for servicing of SIPs – Systematic investment plans.SIP is a way of periodic investment where installments are debited from investors bank account.
NACH – National Automated Clearing House is faster,centralized and improved clearing service.
Sample form of ICICI Prudential mutual fund:
Sample pre-filled NACH form of Franklin Templeton:
Click on image to enlarge.
Precautions to take while filling NACH form:
- Do not alter,over-write any thing otherwise NACH mandate will likely to be rejected.
- Do not use whitener to erase the options.
- If any option is pre-ticked then do not tick any option provided.
How it will impact new SIPs:
Investors need to use new NACH forms for systematic registration instead of ECS forms. ECS forms may not be accepted by banks.
What will happen to existing SIPs:
There won’t be any impact on ongoing SIPs registered..till their validity.But use new NACH form while renewal.
NACH Registration benefits:
- As NACH is faster process , overall registration time can be reduced up to 10 days instead of earlier 30 days.
- If there is rejection of mandate from bank side then investors can easily come to know reasons of rejection …like signature mismatch etc.
Will banks charge investors for NACH Registration / Cancellation:
Clarity will emerge whether banks will charge investors for NACH registration / cancellation or not.
Though SIP registration time can be reduced to 10 days it is suggested to keep a gap of 30 days between mandate submission & first SIP date …till further clarity is emerged.
