NACH stands for National Automated Clearing House, the system NPCI runs for repeated payments between banks. A NACH debit on your statement is usually money collected under a mandate you signed once, such as a loan EMI, a SIP or an insurance premium; a NACH credit is a bulk payment in, such as salary, a dividend or a subsidy.
NACH debits and credits
A NACH debit collects money from your account for a company. NPCI lists telephone, electricity and water bills, loan instalments, mutual fund investments and insurance premiums among the payments it collects. The company can collect only because you signed a mandate, a standing permission that NACH keeps in its mandate management system.
A NACH credit pays money into many accounts at once. NPCI lists subsidies, dividends, interest, salary and pensions.
When a NACH debit can arrive
The RBI made NACH available on all days of the week from August 1, 2021, so a NACH debit can land on a weekend or a holiday.
How banks print it
The code varies by bank: NACH, ACH or ECS at the start of the line all describe the same kind of mandate-based payment. The company's name and a reference number usually follow it.
Example lines
Made-up lines in the usual shape. Your bank's wording will differ.
NACH DR EXAMPLE FINANCE LTD 100000000001A loan EMI a lender collected under your mandate.ACH D- EXAMPLE MUTUAL FUND-100000000002A SIP instalment, printed with ACH instead of NACH.NACH CR EXAMPLE EMPLOYER PVT LTDA bulk credit, such as salary, paid in through NACH.
How Fynora reads it
When NACH, ACH or ECS starts a line on a bank account statement you import, Fynora counts the payment as "Auto-debit" in the How you paid section of Reports.
Questions
Is NACH the same as ECS?
NACH replaced ECS. NPCI launched NACH to consolidate the ECS systems that ran across the country, and the RBI says the last ECS centres moved to NACH by January 31, 2020. Some statements still print ECS for these payments.
Why was money taken from my account through NACH?
A company holds a mandate you signed: a lender for an EMI, a fund house for a SIP, an insurer for a premium, or a utility for a bill. Its name usually follows the code on the same line.
What happens if a NACH debit fails?
If the balance is too low on the day, the debit is returned unpaid, and your bank may charge a return fee for it. The payment itself is still due to the company.