NACH Legacy Mandate FAQ's

Faq

What is Electronic Clearing Service (ECS)?

Electronic Clearing Service (ECS) was introduced in India by Reserve Bank of India (RBI) during 1990s to facilitate periodic payments like loan instalments, insurance premium etc. In ECS the mandate form was to be physically sent to the customers’ bank for registration.  It uses 156 character format.

What is National Automated Clearing House (NACH)?

National Automated Clearing House (NACH) was introduced in the year 2013 to facilitate registration of mandate on the basis of an image of the mandate transmitted through NACH to the customer’s bank. It uses 306 character format with a facility to transmit the image of the mandate.

What is migration from ECS (156) to ACH (306)?

As ECS and NACH systems follow different formats RBI has directed that the transactions pertaining to mandates registered in ECS format (156) should be migrated to the NACH format (306).

What is the need for this migration?

As explained above ECS and NACH follow different formats, NACH is a robust system catering to the future needs of the eco system. The migration is carried out to maintain uniformity in the format that will bring in operational efficiency, cost reduction and also ease of use to the eco system.

What is the name of this migration project?

Legacy mandate migration.

Does this migration involves submission of images of the mandates already registered under ECS?

No, it is not mandatory for the corporate or the presenting bank to submit the image of the mandates already registered, however the corporate or the presenting bank may provide the images voluntarily to help the customers’ bank to register the data mandate.

What is data mandate?

In the migration process the presenting bank should first upload ECS mandate information into NACH system.  As the mandate data is uploaded without the image it is called data mandate.

How many banks are involved in this migration process?

769 banks are involved in this migration process.

What is the process to be followed by banks for this migration?

The banks are advised to follow the process as detailed below:

  1. Presenting bank should upload the data mandate for all the ECS mandates registered and valid as on the date of migration.
  2. After uploading the mandate data the presenting bank will get Unique Mandate Reference Number (UMRN) allotted to each data mandate by NACH system.
  3. The customers’ bank should verify the mandate data on the basis of the copy of the mandate in their possession.  As an additional check transactions in the customers’ account may also be verified to authenticate the mandate and update in their Core Banking System (CBS).
  4. The presenting bank should present the transactions with UMR number of the data mandate.
  5. The customers’ bank can validate the transactions against the mandate registered in their CBS and honor only the valid transactions.

What is the timeline for completing migration?

The migration is carried out on phased manner i.e. only those banks who are ready to process in 306 format are being migrated and subsequently disabled in ECS (156) format. The migration is expected to get completed by January 2019.

Is there any impact on the customer on account of this migration?

There should be no impact on the customer, as these transactions were already processed under ECS based on the mandates that were already executed.

Is it necessary for a customer to give fresh mandate?

No, as the data mandates are presented on the basis of ECS mandates already registered with the bank there is no need for the customer to issue a new mandate. It may be noted that in exceptional cases where the customers’ bank has misplaced or lost the original mandate, may request the customer to give a fresh mandate. However, banks should not seek new mandate from all the customers.

On what basis customers’ bank will verify the legacy mandate presented?

The customers’ bank should verify the mandate data on the basis of the copy of the mandate in their possession. As an additional check transactions in the customers’ account may also be verified to authenticate the mandate and update in their Core Banking System (CBS) 

Will there be any additional charges levied by the bank to the customer for this migration?

Banks should not levy any additional charges to the customer on account of this migration process.

Can the mandate once given by a customer be withdrawn or stopped?

Yes. In case of any need to withdraw or stop a mandate the customer can do so by approaching the user institution to withdraw the mandate. The account holder / customer can also withdraw the mandate / debit instruction directly from his / her banker without involvement of the User institution. The withdrawal instructions of a customer in such cases would be treated equivalent to a ‘stop payment’ instruction in cheque clearing system. However, as a matter of best practice, the customer may also provide prior notice or intimation of mandate withdrawal to the ECS user institution well in time, so as to ensure that the input files submitted by the user institution does not include the ECS Debit details in respect of the withdrawn / stopped mandates, leading to avoidable returns/rejections etc. (reference ECS FAQ published by RBI).

What could be the possible reasons for customer disputes?

The following are the indicative reasons for customer grievance:

  1. Corporate raising a debit transaction even after the recovery period is completed.
  2. Corporate raising a debit transaction for incorrect amount.
  3. Customers’ bank debiting the customer with incorrect amount or not debiting the right customer.
  4. Customers’ bank debiting the wrong customer due to incorrect registration of mandate or technical reasons

In case of any dispute due to the mistake of corporate, whom should the customer approach?

  1. If it is an excess or short debit raised by the corporate then the respective corporate should take corrective action.
  2. If the corporate do not redress the grievance the customer should approach his bank who in turn should raise the dispute through dispute management system (DMS) provided by NPCI.

In case of any dispute due to the mistake of the bank, whom should the customer approach?

  1. If the account debited with excess or short debit by customers’ bank, the bank should take corrective action. 
  2. If the customers’  bank do not redress the grievance the customer should approach the corporate who in turn should raise the dispute through their presenting bank through dispute management system (DMS) provided by NPCI.

If customers’ account is debited by the bank for unrelated transaction due to incorrect registration of mandate or technical issue, whom should the customer approach?

c) If the account is wrongly debited by his bank due to incorrect registration of the mandate or technical issue at his bank, the bank should take corrective action.

a)  If the customers’ bank do not redress the grievance, such customers should approach Banking Ombudsmen in case of non-redressal of grievances by his bank.   

Note:  In all the scenario explained in question 13 to 15 the customer has to report the disputed transaction within 7 days with supporting documents with a covering letter to his/her bank branch or the corporate.

What is the time limit for the customer to refer to his/her bank for dispute?

In case of unauthorized transaction the customer to report such transaction to the bank within 7 days from the date of transaction.

(Reference: http://meity.gov.in/writereaddata/files/RBI%20Circular%20On%20Limitation... ability.pdf)