RBI's NACH move: Here's what it means for the common man

Generally, when the RBI Governor announces the decisions of the MPC, the attention is tuned towards interest rates, economic growth rate, inflation, etc. Along with monetary policy, the central bank also announces changes in some rules or new facilities. But they get drowned amid the big market-related announcements.

A similar thing happened on June 4 when Reserve Bank Governor Shaktikanta Das was addressing the media. He said the National Automated Clearing House (NACH) will now function every day. Since the facility of Real Time Gross Settlement i.e. RTGS has been started every day, now with the introduction of NACH every day, there will be many changes for you.

What is NACH?

NACH is a system of bulk payments, which is operated by the National Payments Corporation of India (NPCI). Through this, an individual, an institution, a company or even the government can simultaneously transfer dividend, interest, salary, pension etc. to the bank account of more and more people. Not only this, through this system, loan installments, electricity bill, mobile bill, insurance premium, etc., can be deposited in the bank simultaneously on behalf of many people. NACH has become an important digital medium for government to deposit money directly into the accounts of the beneficiary.

How will you benefit?

You must be wondering how this move will help you. Many companies distribute salaries through NACH so that money reaches the accounts of all its employees at the same time. Since till now this facility is available only on the working days of the bank, then you are not able to get salary on the fixed holidays except second and fourth Saturdays. This will not happen from August 1 as NACH will be operational on all days.

Why you need to be careful

For the borrowers, there is a fixed day to pay the monthly installment. Similarly, in SIP, the day is fixed for investment, premium or bill payment. For all this, many use the auto debit facility. The advantage of using this system is that we do not have to remember the date and only have to ensure sufficient amount is present in the account on the due date.

It has been happening so far that if the due date of payment is a bank holiday, then the transaction is completed on the next working day. Until now, it must have happened many times that sufficient amount may not have been present in your account on the day the EMI payment was to be deducted. But you managed to ensure the next day your account had sufficient money and no penalty had to be paid.

This will not happen from August onwards. Payment will be credited directly to your account on the day fixed for payment, even if it is a bank holiday. In such a situation, it is necessary that you ensure that you have sufficient amount in your account on the date on which your EMI payment is due. This way you will be able to avoid fines.

(The writer is a senior journalist. Views expressed are personal)