NACH

NACH (National Automated Clearing House) is a centralised electronic payment system operated by the National Payments Corporation of India (NPCI) for bulk repetitive transactions — both credits (salary, dividend, interest, pension payouts) and debits (EMI, SIP, insurance premium, utility bill, subscription billing).

Two flavours:

• NACH Credit — sender bank pushes funds to multiple beneficiary accounts in one batch. Used for salary disbursement, dividend payout, vendor payments.
• NACH Debit (e-NACH / e-Mandate) — bank debits payer accounts at the schedule defined by an upfront customer mandate. Used for SIPs, EMIs, subscription billing, utility bills.

Mandate-based — the core innovation:

A NACH mandate is an authorisation by the bank account holder permitting the corporate (the Sponsor Bank's customer) to debit the account up to a specified amount, at a specified frequency, for a specified period. The mandate can be set up:

• Physically (paper mandate, signature + bank stamp)
• e-NACH (electronic mandate) via debit card + OTP or net banking authentication
• API-based eMandate for embedded subscription flows

Once a mandate is active, the corporate uploads a debit file to NACH and funds are swept from payer accounts to the corporate's bank account on the scheduled date.

Why this matters for startups:

• SaaS subscription billing — eMandate is the Indian alternative to credit-card recurring (which has been disrupted by RBI's 2021 e-mandate guidelines and AFA requirements). Many B2C SaaS / EdTech / OTT companies have moved to eMandate.
• Fintech lending — EMI collection rides on NACH.
• Capital calls for AIFs — increasingly LPs are asked to sign a NACH mandate at onboarding, allowing the fund to debit drawdown amounts directly. Streamlines collection but requires careful mandate amount calibration.
• Salary, expense reimbursement — bulk credit pushes.

Indian-context notes:

• RBI's 2021 framework restricts auto-debit on cards above ₹15,000 without AFA — pushing recurring flows toward eMandate.
• Mandate cap: maximum debit amount per transaction is specified in the mandate; cannot be exceeded without a fresh mandate.
• Bounced mandates attract fees from the bank (typically ₹200–500 per bounce) and impact CIBIL for the payer.

Compared to UPI AutoPay: UPI AutoPay (built on UPI 2.0 mandates) is alternative auto-debit rails for amounts up to a cap (₹15,000 per transaction without AFA, with relaxations for specific use cases). Many startups offer both.