How changes in NACH will affect cheque payments

The new directions of Reserve Bank of India (RBI) to make the facility of bulk clearing round the clock has brought in some changes to the cheque payment system. The new changes came into effect from August 1 this year.

Those who use a cheque to make payments for services like electricity, gas, telephone, water, or pay their equated monthly installments, should remember that it can be cleared on all days of the year.

This means that the bank account from where the about will be debited should have sufficient funds, otherwise the cheque will bounce leading to penalty.

Till now, the National Automated Clearing House (NACH) facility was available only when banks were open, usually between Monday to Friday. Auto-debit instructions given by the bank account holder were not processed on days the bank were closed like Sundays, bank holidays and even gazetted holidays

But from August 1, the system became operational on all days. The RBI had taken the decision to relax the timings during the bi-monthly monetary policy review in June in order to enhance the convenience of customers.

Since most companies use NACH to give salary, the amount was not credited on holidays due to earlier restrictions.

NACH is a bulk payment system operated by the National Payments Corporation of India (NPCI) and facilitates one-to-many credit transfers such as payment of dividend, interest, salary and pension.

The RBI introduced the ‘positive pay system’ in January this year to safeguard high value bank cheque transactions. It will be eligible for the payment of cheque valuing ₹50,000 and above.

‘Positive pay system’ is an automated fraud detection tool that matches specific information related to the cheque presented for clearing, such as its number, date, payee name, account number, amount, and other details against a list of cheque previously authorized and issued by the issuer.