RBI New Rule- Be Extra Careful When Issuing Cheque For Payment Or Else Bear Penalty

As per the RBI rules, NACH or National Automated Clearing House has been made available on all days from August 1, 2021. Consequently, NACH will be available on all 7 days of the week.

The central bank on June 4 said, "In order to further, enhance customer convenience, and leverage the 24×7 availability of RTGS, NACH which is currently available on bank working days, is proposed to be made available on all days of the week effective from August 1, 2021"

What is NACH?

NACH is the National Payments Corporation of India (NPCI) initiative for banks, financial entities, corporates and government for enabling interbank, high-volume, digital transactions that are repetitive as well as periodic in nature. The system can be used both ways i.e. for making bulk payments such as dividend, salary, pension etc. as well as for bulk transactions that involve collection of funds against telephone bill, investment in mutual funds, insurance premium etc.

National Automated Clearing House (NACH) is a centralised system, launched with an aim to consolidate multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices and removes local barriers/inhibitors. NACH system will provide a national footprint and is expected to cover the entire core banking enabled bank branches spread across the geography of the country irrespective of the location of the bank branch.

What you should note or be mindful about in view of the new NACH rules?

Now as NACH shall be running or will be available on all days, you need to be extra careful when making a payment via cheque as it can go for clearing and get encashed even on non-working days and holidays. So, here in the care that is needed from your end is that you need to ensure that the bank account has sufficient balance especially when the cheque is being deposited for payment. If the cheque bounces, you will be charged a penalty amount.

Notably, NACH in the current pandemic time has enabled transfer of government subsidies in a transparent and timely manner. Also it is the most adopted and prominent method in the DBT or direct benefit transfer scheme.

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