Mutual Fund SIPs – Migration From ECS To NACH:

NPCI -National Payment Corporation Of India have recently issued circular and asked mutual funds to migrate  from ECS – Electronics Clearing System to NACH registration for servicing of SIPs – Systematic investment plans.SIP is a way of periodic investment where installments are debited from investors bank account.

NACH – National Automated Clearing House is faster,centralized and improved clearing service.

Sample form of ICICI Prudential mutual fund:

Sample pre-filled NACH form of Franklin Templeton:

Click on image to enlarge.

 

Precautions to take while filling NACH form:

1. Do not alter,over-write any thing otherwise NACH mandate will likely to be rejected.
2. Do not use whitener to erase the options.
3. If any option is pre-ticked then do not tick any option provided.

How it will impact new SIPs:

Investors need to use new NACH forms for systematic registration instead of ECS forms. ECS forms may not be accepted by banks.

What will happen to existing SIPs:

There won’t be any impact on ongoing SIPs registered..till their validity.But use new NACH form while renewal.

NACH Registration benefits:

1. As NACH is faster process , overall registration time can be reduced up to 10 days instead of earlier 30 days.
2.  If there is rejection of mandate from bank side then investors can easily come to know reasons of rejection …like signature mismatch etc.

Will banks charge investors for NACH Registration / Cancellation:

Clarity will emerge whether banks will charge investors for NACH registration / cancellation or not.

Though SIP registration time can be reduced to 10 days it is suggested to keep a gap of 30 days between mandate submission & first SIP date …till further clarity is emerged.