NBFCs seek easing of rules on NACH mandate cancellation

Non-banking companies (NBFCs) especially those with assets below Rs 500 crore, are seeking easing of rules to allow mandate cancellation facility (for NACH) through simpler means such as Whatsapp/SMS in a secure manner.

Industry Development Council, the industry lobby group of Assets and Loan Financing NBFCs, said this facility should work on a “best effort” basis and not be made mandatory as most customers are not tech-savvy and are not comfortable transacting on electronic platforms.

Many of these are very small and operate in a limited geography and do not have a well-developed website. Also, most of their customers are not tech-savvy and are not comfortable with transacting on electronic platforms. However, they may be comfortable in using SMS or Whatsapp, FIDC said in communication to National Payments Corporation of India (NPCI).

The lobby group said small have with great difficulty convinced their customers to use electronic/non-cash means for EMI payments, but still the prevalence of cash repayments is significant.

The provision of the facility for cancellation of NACH mandates therefore is neither feasible nor effective in achieving the ultimate objective of customer empowerment given the nature of these customers.

NACH (National Automated Clearing House) is a funds clearing platform similar to the existing ECS (Electronic Clearing Service). NACH Cancellation request is used to cancel automatic debit from account every month to pay bills like telephone bills, electricity bills, installments, insurance premiums etc.

FIDC said small that operate in limited geographies and provide the vital last mile credit delivery to unserved and under-served segments of the economy including agriculturists, MSME, small road transport operators etc.

Over time, NBFCs have grown in their importance in serving these segments and according to a study carried out by the Boston Consulting Group, serve 70% of “New To Credit” customers, FIDC said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link

Free Course

"Double Your Traffic in 30 days" + Secret Bonus

valued at $299

This amazing course will teach you, step by step, how to double if not triple your traffic over the next 30 days.

100% Privacy. We will never spam you!