According to a notice issued by reserve Bank of India (RBI) as of early August, customers whose financial activities revolve around checks and or who plan to use checks will have to ensure a minimum bank balance. The new set of rules, which came into effect on August 1, 2021, states that customers planning to issue cheques need to ensure that there are sufficient funds in bank accounts to do so. If this minimum balance is not maintained, the check will bounce. Apart from this, the customer issuing the check may also have to pay a penalty fee. With these changes, RBI announced that National Automated Clearing House (NACH) will work round the clock.
These changes have come into effect from August 1 in all national and private banks. The rule was changed to make the process of clearing checks faster and generally easier. Since the new rule ensures that after Will be operational on all days of the week, this means that Sunday will also be a day on which the entity can process and clear the cheque.
Now, this process has the advantage of being less time consuming as you don’t have to wait until the next week to see your check cleared and you can do your transaction business whenever you want. However, the caveat is that you have to maintain your bank balance and keep it at a fixed amount. Due to fast processing speed and lack of interims like weekends or Sundays, chances of check bounce increase as one day buffer gets exhausted. You will have to pay a fine if the check bounces. Earlier, customers had no need to worry about this issue as they had at least a Sunday, but with the new rule changes, a new dynamic was introduced in how we conduct our banking transactions.
It should be noted that NACH is open and operational 24/7, not only on weekdays and weekends but also on holidays. This allows the unit to provide a whole host of other facilities to the citizens. NACH is essentially a wholesale payment system operated by the National Payments Corporation of India (NCPI). As a result, the unit handles various types of transactions like salary, pension, interest, dividend etc. NACH also acts as a facility through which the average citizen can pay his various bills such as water, electricity, gas, phone bills, loan EMIs, mutual fund investments and insurance premiums to name a few. The biggest advantage of opening all these services is that even on holidays, citizens can clear their due bills without any delay or risk of running out of time limit.
NACH is essentially a centralized system, which was implemented with the intention of consolidating several ECS systems operating across the country under one name or entity. It will provide a framework for standardization of practices. It was also put in place with the intention of removing local barriers and barriers. The objective of the system under NACH was to create a footprint or impact at the national level which would cover the entire core banking system. This would enable banks and their branches which were spread across the country, irrespective of their location.
The reason for bringing this rule change by Apex Bank was to make the lives of many customers easier through the use of 24/7 facilities of RTGS, NACH. Since its inception, the unit has emerged as a popular medium of Direct Benefit Transfer (DBT) to the beneficiaries. This system was particularly useful during the COVID-19 pandemic when the government was tasked with transferring subsidies. In a nutshell, keep these rules changes in mind as you move your banking business forward.
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