The Reserve Bank of India (RBI) previously issued a new set of rules. These new banking transaction guidelines took effect from August 1. One of the more notable changes amongst these rules was that pertaining to the cheque book. The apex bank issued that the National Automated Clearing House (NACH) would be made operational on a 24-hour basis across all national banks and private banks in India. The new changes were rolled out with the intention of making the life of the bank customer easier as well as streamlining the cheque clearing process. With the new rules, the NACH would be able to clear checks on Sundays as well as holidays.
Chequebook users will, therefore, have an easier life when trying to get their cheques cleared on bank holidays, including weekends. It also has the added benefit of being less time-consuming. However, with the introduction of such perks comes a caveat as well. The catch here lies in the fact that bank account holders who wish to issue such cheques on weekends or holidays, will have to maintain a mandatory minimal balance in their bank accounts. The reason behind that is if the cheque issued on a weekend or holiday is cleared and if it bounces, the minimum balance will help cover the penalty fee. It is also prudent to maintain this as banks will still maintain their holidays, regardless of the fact that the NACH will be operational.
The issue with having the cheque processed faster is that the rate of the cheque bouncing also goes up. In this unfortunate parallel, you as the bank account holder will be liable for the penalty. All things considered; this is a major overhaul in terms of how customers conduct their banking business. Earlier, customers did not have to worry about cheques clearing on a weekend, so this change brings about a need for significant re-orientation when it comes to banking habits.
With the changes of the NACH being open 24 hours a day, it also opens up a wider range of services to citizens. NACH is a bulk payment system that is operated by the National Payments Corporation of India (NCPI). That being the case, it provides and facilitates a number of useful and diverse financial services such as salaries, pensions, interest, dividends and so on. Additionally, it also acts as a platform through which one can pay their various bills. Everyday amenities such as water, electricity, gas, phone bills, loan EMIs, mutual fund investments and insurance premiums can be paid through the NACH system. The 24-hour active status means that you do not need to wait for a weekend or a holiday to get over before you can pay the bill. This lessens the risk of a penalty or a fine for the same that one might encounter under normal circumstances.
NACH was introduced as a centralized system in hopes of consolidating several ECS systems across India under one organisation. It was also the brought to life with the intent to bring a form of standardization to practices by removing local barriers and inhibitors. Essentially, it was meant to cover the entirety of the core banking system in India. This would bring better enablement of bank branches regardless of their geographical barriers. Since the establishment of the NACH, it has become a popular method of direct benefit transfer (DBT) to beneficiaries, which was particularly useful during the Covid-19 pandemic when the government used it to transfer subsidies.