In a recent notification, NPCI permitted eSign-based E-Mandates for NACH member banks thus overturning the decision made in 2018 to stop the service due to a ruling by the Supreme Court of India.
NPCI states in its circular that the updated version of E-Mandate will be launched to “bring in more controls and process efficiency”, but what realistic advantages can banks expect with eSign-based E-Mandate?
EMIs and loan repayment made easy
Following the NPCI decision to stop eSign based mandate authentication, customers could only use their NetBanking credentials or their debit cards to authenticate mandates. This was a relatively inefficient method since it required the authentication of several bits of information.
However, with eSign-based eMandate, customers can authenticate with just an OTP that they will receive on their Aadhaar-linked mobile number, enabling quick authentication and resulting in faster payments.
Additionally, with loan repayments exceeding loan disbursements in the last month and digital methods coming to the fore due to the constraints imposed by pandemic-related regulations, banks and NBFCs have been clamouring for methods that make loan repayment easier for their customers.
Greater reach for banks
NetBanking and card-based authentication also meant that people living in semi-urban and rural areas did not have access to eMandates and hence could not avail many of the services that banks offer.
With the greater reach that Aadhaar affords, these people can now access eMandate services offered by banks and as a result can take out loans and pay EMIs easily.
In this way, banks can grow their customer base by adopting eSign-based eMandate.
Fully digitized and automated
The conditions imposed by the pandemic have forced banks and NBFCs to adopt digitized methods. Banks have been discovering through this, that digitization cuts costs and saves them money.
It’s no different with eMandates: Automating the recurring payments of customers has been shown to massively reduce costs for financial institutions and reduce their turnaround time by nearly 99%.
Digitization is fast becoming the new norm and banks are experiencing tremendous benefits as a direct consequence.
SignDesk’s new and improved eMandate product
Banks can now experience all the benefits of the new E-Mandate described above, automate their recurring payments, and massively speed up their payments by using SignDesk’s eSign-enabled eMandate solution.