The Advantage of eMandate/eNACH for Financial Institutions

eMandate for financial institutions

Recurring Payments Made Hassle-Free: The Benefits of eMandate for Financial Institutions

Technology-based solutions have transformed the finance industry by offering convenient procedures such as eNACH/eMandate. Using eNACH, institutions like banks can effortlessly automate their recurring payments. 

The eMandate process is simple, quick, and easy to carry out. The process facilitates high volume periodic customer mandate transfers over the internet to provide a simple yet effective solution for banks. In addition, the electronic-mandate process offers a high level of reliability, ensuring customers experience a smooth and convenient experience. 

By integrating the eNACH procedures in their systems, financial institutions can expect smoother transaction cycles, enabling recurring payments to be done on time. The convenience offered by the process can help customers make small value recurring payments digitally, which can positively impact financial institutions. 

What is eMandate?

To understand what eMandate is, we first need to know what mandate stands for. Mandates are standing instructions you issue to your banks or other financial institutions to automatically debit a certain amount from your account regularly. Such systems are used for payment of loans, maintaining active subscriptions to certain services, etc.

eMandate is a more convenient form of debiting such payments. It is a recurring payment service that enables financial institutions to collect periodic payments digitally. This service was initiated by the National Payments Corporation of India (NPCI) and the Reserve Bank of India (RBI). 

This digital process eliminates the need for businesses and financial institutions to send out reminders to customers. In addition, customers can steer clear of late penalty charges as a result of delayed payments. eMandate thus serves as a win-win solution for both financial institutions and their customers alike. 

eMandate Working Process

Detailed below is the procedure followed for carrying out the eMandate process across various financial institutions. It offers a convenient recurring payment module involving the customer, financial institutions, and the NPCI. 

e mandate process

 

  • eMandate Registration Process

  1. To initiate the eMandate registration process, the customer needs to raise a request using an eMandate form. 
  2. An authorization request is sent by the business or financial institution to the customer. Institutions can carry out this process via their eMandate portals or through digital eMandate solution providers like SignDesk.
  3. The customer authorizes the request either by providing his/her debit card details or net banking credentials.
  4. The obtained details are handed over to the sponsor bank i.e., the financial institution that offers a platform for the eMandate to take place. 
  5. The sponsor bank forwards the customer’s eMandate details to the NPCI.
  6. The NPCI sends the electronic-mandate requests to the issuing bank i.e., the destination bank which holds the customer’s account. 
  7. The issuing bank either accepts or denies the authorization request at this point.
  8. Post that, the issuing bank shares the response status with the NPCI, which in turn shares it with the sponsor bank. 
  9. The response of the eMandate request is then shared with the solution provider which in turn activates the digital mandate request. 
  • eMandate Fund Transfer Process

Once the eNACH/eMandate is activated, customers can expect a preset amount to be debited periodically from their accounts. Financial institutions can experience a hassle-free payment cycle that takes place on time. 

  1. The fund transfer for the eMandate is initiated by the solution provider post receiving the response.
  2. The amount allocated for the eMandate is debited from the customer’s account in the issuing bank. 
  3. The NPCI would then transfer the amount to the sponsor bank.
  4. The sponsor bank pushes the amount to the eMandate solution provider’s nodal account.
  5. The received amount is transferred to the financial institution’s account that had requested the eMandate.

How is eMandate Used in Financial Institutions?

Use of eMandate in Financial Institutions

  • Automated Process: eMandate is a fast, secure, and reliable way for financial institutions to automate their large volume of debit transactions. Banking institutions can implement this digital process to automate loan EMI payments for their customers. eNACH would ensure timely payments for the banks and make the EMI payment process highly convenient for its customers. The auto-debit feature of this process enables banking institutions to seamlessly deduct the prefixed EMI on a particular day of every month. 
  • Hassle-Free Fund Transfers: As one would not have to visit the bank multiple times a year for payments, the customer would prefer to take out a loan from banks and NBFCs that offer convenient EMI payment methods. This module would be highly convenient for customers to manage their active subscriptions to various goods and services. This, in turn, can enable financial institutions to expect higher customer retention rates.
  • Paperless Workflow: The entire eMandate/eNACH procedure is paper-free, right from registration to execution. The customer can carry out the process remotely just with the presence of a phone/computer and an internet connection. 

Top Banks in India Utilizing eMandate/eNACH 

Provided below is an eMandate bank list of the various major banking institutions that offer eMandates to their customers. 

  1. Yes Bank
  2. Kotak Mahindra Bank Ltd.
  3. ICICI Bank Ltd.
  4. IDFC First Bank Ltd.
  5. Axis Bank
  6. Citi Bank
  7. Bank of India
  8. IDBI Bank
  9. Union Bank of India
  10. Bank of Baroda

You can check out the NPCI eMandate Bank List to know more about the various banks using eNACH/eMandate services in India. 

Role of the NPCI in eMandate

The NPCI or National Payments Corporation of India is a governing body that regulates eMandate procedures in the country. It plays an important role in overseeing the various activities pertaining to eMandates. Some of its responsibilities include,

  • Maintaining eMandate records for future reference and use
  • Amending and canceling eMandates
  • Amending procedural guidelines surrounding the eMandate process
  • Levying membership and transaction charges
  • Notifying member banks
  • Imposing penalties for non-adherence to the eMandate procedural guidelines
  • Terminating/suspending NACH memberships in the case of non-compliance or violation from the member banks or businesses. 

Conclusion

The benefit of implementing eNACH procedures is that financial institutions can observe a reduced turnaround time concerning their customers’ debit payment transactions. Bulk transactions would become much easier to manage, as the process of eNACH/eMandate for financial institutions is safe and reliable. This digital recurring payment model can also aid in reducing operational costs, making it a desirable proposition for the finance industry. 

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