Registered Office: C-9, 8th Floor, Reserve Bank of India Premises,
Bandra-Kurla Complex, Bandra-East, Mumbai-400 051
NPCI/ 2014-15/ NACH/Circular 58
November 5, 2014
To,
All Member Banks of NACH System
Madam/Dear Sir,
NACH Debit - Mandate Processing Guidelines
Mandate Management plays the most essential role for the success and adoption of NACH
Debit as an effective payment tool. In the past 12 months since its introduction, more than 6
lakh mandates have been processed on the platform. Though many of these mandates have
been successfully processed, a higher rate of avoidable mandate rejections has also been
observed.
2. In order to standardize the understanding of NACH mandate and its processing, the
‘Mandate Processing Guideline’ is being issued.
3. NPCI will be periodically reviewing the guideline and publishing it to all member banks from
time to time.
With Warm Regards
(Vipin Surelia)
SVP & Head – Product Development
The Mandate processing guidelines
provides detailed understanding on various
aspects involved in mandate processing for
the sponsor and destination bank. It is
recommended that this document be
retained as reference paper for the banks
operations staff involved in mandate
processing and also included in internal
training material on the subject .
Mandate
Processing
Guidelines
(November 2014)
1
EXECUTIVE SUMMARY:
Mandate Management plays the most essential role for the success and adoption of NACH
Debit as an effective payment tool. NACH Debit would benefit our country’s entire Financial
eco-system which is largely driven by the Banks, Corporates and their customers. Some of the
unique features of this product are digitization of mandates, better tracking of mandates,
standardized mandate form, confirmed mandate approval cycle and unique reference number
for each mandate.
In the past 12 months since its introduction, more than 6 lakh mandates have been processed
on the platform. Though many of these mandates have been successfully processed, an higher
rate of mandate rejections have also been observed. A closer analysis of these rejections revel
that more than 80% of the rejections could have been curtailed by better education of the sales
staff, who facilitate the customer in filling the mandate, and awareness among the destination
banks on the criticality of timely processing of these mandates.
In order to standardize the understanding of NACH mandate and its processing, there was felt a
need to publish a ‘Mandate Processing Guideline’. Accordingly, a ‘Task force’ of 9 banks was
established for building a broader understanding on the expectations from this document and
also for gathering their valuable inputs. The ‘Task force’ comprised of State Bank of India, Bank
of Baroda, Punjab National Bank, Union Bank of India, HDFC Bank, ICICI Bank, Axis Bank, HSBC,
Saraswat Bank. The ‘Task force’ met twice in the month of July 2014 ie. 9th and 21st July and
debated on various aspects involved in mandate processing.
The ‘Mandate Processing Guideline’ incorporates valued inputs received from the banks
involved in the ‘Task force’ and also the NACH Steering Committee members. NPCI will be
periodically reviewing the guideline with the help of the ‘Task force’ and publishing it to all
member banks from time to time.
2
INTRODUCTION:
The participating Banks on NACH Debit play a dual role in the mandate processing cycle, which
are as under:
1. Mandate initiation:
Mandate initiating process is when a Bank receives the mandates from their Corporate
or its retail customers, and submits it on NACH for registration.
2. Mandate acceptance:
Mandate acceptance is a process which starts with the Bank receiving, all such initiated
mandates, and is expected to submit its acceptance/rejection on the NACH system.
The guideline below covers the process from both the aspects, for the Sponsor as well as the
Destination Bank. The document also provides a visual interpretation of the mandate form
(Annexure I & II) and the expected mandate reject reason codes for various scenarios as
experienced by the banks today (Annexure V)
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GUIDELINES FOR MANDATE INITIATION
NACH mandate management system offers a unique feature of allowing mandate initiation to
be done by the Sponsor as well as the Destination bank.
i.
Sponsor bank initiated mandate:
When the Corporate submits their customer’s
mandates to their Bank (Sponsor Bank) towards collection of funds from these
customers having account with various Banks.
For example: ABC Mutual Fund collects NACH Debit Mandates from their customers
and submits it to their Bank (Sponsor Bank). Here the Sponsor Bank collects all these
mandates and initiates the process of registration by uploading it on to the NACH
system,
ii.
Destination bank initiated : Customer submitting mandate to the bank where he holds
the account, which needs to be debited.
In Detail:
i.
-
Sponsor Bank Initiated Mandate:
The Corporate collects the mandate from its customers, and submits it for registration
to their bank,
3
-
The Corporate and the Sponsor Bank have to ensure that the mandate adheres to the
standard mandate layout, (as shown in Annexure I and II),
-
The Bank will scan all such mandates, and further, create a data file based on the details
given on the mandate,
-
It will be the responsibility of the Sponsor Bank to ensure that all mandatory fields on
the physical mandate and the data file are populated appropriately and is in line with
the information provided by the customer. (Please refer Annexure III for list of
mandatory and non-mandatory fields on the mandate),
-
The Corporate and the Bank may enter into a mutual arrangement where the Corporate
plays additional role of scanning and/or data entry of the mandate variables,
-
The sponsor bank shall ensure that the data file and scanned image of the mandate
submitted by the bank adheres to all technical specifications stated in the Bank
Specification Document (BSD) and any enhancements to it from time to time,
ii.
-
Destination Bank Initiated Mandate:
The customer submits the duly filled mandate form to his/her Bank (In this case it will
be the Destination bank) branch (i.e., where he/she holds an account). (The destination
bank may give an option to the customer to initiate a mandate using its netbanking or
mobile banking channels),
-
The Destination Bank shall ensure that all the necessary customer authentication is
done before registering the mandate on NACH,
-
It will be the responsibility of the Sponsor Bank to ensure that all mandatory fields on
the physical mandate and the data file are populated appropriately and is in line with
the information provided by the customer. (Please refer Annexure III for list of
mandatory and non-mandatory fields on the mandate),
-
Destination Bank will have to submit only the data file on the NACH platform. Here, the
image of the mandate need not be captured.
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GUIDELINES FOR MANDATE ACCEPTANCE
As in the case of mandate initiation, the mandate acceptance activity can be done by both
Sponsor as well as the Destination Bank, though the responsibilities would differ.
i. Destination Bank Mandate Acceptance
-
The Destination bank, as part of the mandate approval process, is expected to validate
the ‘customer signature’ and ‘account number’, based on the data submitted by the
Sponsor Bank. The Bank should also verify if the account number in the data field and
image matches exactly with the complete account number as reflected in the CBS. The
signature on the mandate should also be matched with the one registered with the
bank,
-
Bank should mandatorily act on the incoming mandate, either with acceptance or
rejection, within TAT of 5 days (subject to change)
-
In cases of rejection, the Destination Bank should select an appropriate reason for reject
from a given set of available options,
-
The response file submitted by the bank should adhere to all technical specifications
stated in the BSD and any enhancements to it from time to time.
ii. Sponsor Bank Mandate Acceptance
-
Sponsor Bank, on receipt of the mandate initiated by a Destination Bank, will share the
details of the mandate with its respective corporate clients.
-
Sponsor Bank will accord its acceptance/rejection of the mandate.
-
In cases of rejection, the Sponsor Bank should select an appropriate reason for reject
from a given set of available options,
-
Sponsor Bank should mandatorily act on the incoming mandate, either with acceptance
or rejection, within TAT of 5 days (subject to change),
-
The response file submitted by the bank should adhere to all technical specifications
stated in the BSD and any enhancements to it from time to time.
------------------------------------------------------------------------------------------------------------------------------Note: NPCI provides an option to the banks to execute the above activities using the GUI facility or ACH File Gateway. The bank may refer the respective user manuals provided by NPCI for the detailed steps
involved in the process.
5
ANNEXURE I: OLD NACH MANDATE VALID UNTIL NOVEMBER 30, 2014
6
Note: mandate dimension 8” x 3 2/3”.
ANNEXURE II: REVISED NACH MANDATE
7
Note: mandate dimension 8” x 3 2/3”.
ANNEXURE III: MANDATE FIELDS
Field Description
Mandatory
(Yes/No)
Mandate
Data
Mandate instruction to
Create/Cancel/Amend
No
Yes
Name of Corporate collecting payment
Yes
Yes
Sponsor Bank Code
No
Yes
Corporate User code
No
Yes
Mandate Date
No
No
Customer A/c type
Yes
Yes
Customer A/c no.
Yes
Yes
Customers Bank Name
Yes
No
Amount
Yes
Yes
Maximum Amount/Fixed Amount
Yes
Yes
Customer Phone/email
No
No
Customer Banks IFSC/MICR
Yes
Yes
Customer Name
Yes
Yes
Customer Signature
Yes
No
Start date
No
No
UpTo date/Until Cancelled
Yes
Yes
Frequency
Yes
Yes
Reference 1
No
No
Reference 2
No
No
Category Code
NA
Yes
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Annexure IV: Mandate Return Reason
Code
Name
Signature (1 - 10)
M003
Drawers signature differs
M004
Drawers signature required
M005
Drawers signature to operate account not received
M006
Drawers authority to operate account not received
M007
Alterations require drawer's authentication
M008
Company 'FOR' stamp required
Stop Payment (11 - 20)
M011
Payment stopped by attachment order
M012
Payment stopped by court order
M013
Withdrawal stopped owing to death of account holder
M014
Withdrawal stopped owing to lunacy of account holder
M015
Withdrawal stopped owing to insolvency of account holder
Instrument (21-35)
M024
Amount in words and figures differ
M027
Image not clear
Account (36-45)
M037
Account closed
M038
No such account
M041
Account blocked
M042
Account description does not tally
M043
Nature of debit not allowed in A/c type
Miscellaneous (56-75)
M057
Payer Name Mismatch
M058
Name of beneficiary not provided or not legible
M060
Invalid Frequency
M061
Frequency of payment not mentioned on mandate
M062
Period of validity not mentioned or invalid end date
M063
Invalid Bank Name
M072
Data mismatch with mandate
M073
Mandate Incomplete
M065
Fixed' or 'Maximum' option not specified on mandate
Combination (76-85)
M076
Data Mismatch: Frequency and Period
M077
Data Mismatch: Frequency and Signature
M078
Data Mismatch: Period and Signature
M079
Data Mismatch: Debit Type and Signature
9
Sponsor Bank Rejects (86-95)
M086
SP_Customer identifier mismatch
M087
SP_Incorrect amount
Amendment
A001
On Customer request
Cancellation
On Customer request
C001
On Corporate request
C002
C003
Account Closed or Frozen or Inoperative
Acceptance
ac01
Default Ack Accept Reason
NPCI system generated
sack
Automatic cancel request acceptance
ncfe
Default forced not acknowledge acceptance reason
ncex
TAT Expired
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Annexure V: Possible Scenarios and expected Mandate Return Reason
S.
Mandate Field
Possible Scenarios
No.
1.
Mandate instruction to
None of the options selected on
Create/Cancel/Amend
the Mandate form or more than
Qualifies
for Reject
(Yes/No)
Expected Mandate Return Reason/Remarks
Information submitted by the Initiating Bank in the
No
data file to considered as final
one option selected
2.
UMRN
UMRN on mandate not provided
for a ‘CREATE’ mandate request
No
UMRN not provided for a
‘Amend’ or ‘Cancel’ on mandate
UMRN number is not expected to be written on the
mandate form for a ‘CREATE’ mandate
M073 – Mandate Incomplete
Yes
form
3.
Mandate Date
not provided on mandate form
No
4.
Sponsor Bank Code
not provided on mandate form
No
not matching between data file
and mandate form
5.
Utility Code
not provided on mandate form
not matching between data file
and mandate form
6.
Name of Corporate collecting payment
not provided on mandate form
No
Information submitted by the Initiating Bank in the
data file to considered as final
No
No
Yes
Information submitted by the Initiating Bank in the
data file to be considered as final
M058 – Name of beneficiary not provided or not
legible
11
S.
Mandate Field
Possible Scenarios
No.
not matching between data file
and mandate form
7.
Customer A/c type
not provided on mandate form
not matching between data file
and mandate form
Not matching CBS information
8.
Customer Bank A/c no.
not provided on mandate form
Qualifies
for Reject
(Yes/No)
Yes
Yes
Yes
Yes
M073 – Mandate Incomplete
M072 – Data Mismatch with Mandate
M073 – Mandate Incomplete
M072 – Data Mismatch with Mandate
Yes
A/c number
incomplete/incorrect/not
M072 – Data Mismatch with Mandate
No
not matching between data file
and mandate form
Expected Mandate Return Reason/Remarks
M038 – No Such Account
Yes
complying to CBS format
Account closed
Account blocked/Frozen
9.
Customers Bank Name
not provided on mandate form
Yes
Yes
Yes
M037 – Account Closed
M041 – Account Blocked
M073 – Mandate Incomplete
12
S.
Mandate Field
Possible Scenarios
No.
mismatch between Mandate
and data file
10.. Customer Banks IFSC/MICR
not provided on mandate form
mismatch between Mandate
and data file
Qualifies
for Reject
(Yes/No)
Yes
Yes
Yes
IFSC/MICR doesn’t match with
the branch where customer
Amount
not provided on mandate form
mismatch between Mandate
and data file
Amount in figure and words not
matching
Customer not maintaining
sufficient balance
M072 – Data Mismatch with Mandate
M073 – Mandate Incomplete
M072 – Data Mismatch with Mandate
NACH being a centralized system only the bank
No
holds the account
11.
Expected Mandate Return Reason/Remarks
identifier component of the IFSC/MICR is
considered for processing.
Yes
Yes
Yes
M073 – Mandate Incomplete
M072 – Data Mismatch with Mandate
M024 – Mandate irregularly drawn or amount in
words and figures doesn’t match
No
Customer not maintaining
sufficient balance to debit
No
mandate processing charges
12.
Frequency
not provided on mandate form
Yes
M061 – Frequency of Payment not mentioned
mismatch between Mandate
Yes
M072 – Data Mismatch with Mandate
13
S.
Mandate Field
Possible Scenarios
No.
Qualifies
for Reject
(Yes/No)
Expected Mandate Return Reason/Remarks
and data file
Multiple options ticked on
mandate form
13.
Maximum Amount/Fixed Amount
not provided on mandate form
mismatch between Mandate
and data file
Both options ticked on mandate
form
14.
Reference 1
not provided on mandate form
mismatch between Mandate
and data file
15.
Reference 2
not provided on mandate form
mismatch between Mandate
and data file
16.
Customer Phone/email
not provided on mandate form
mismatch between Mandate
and data file
17.
Start date
not provided on mandate form
and data file
mismatch between Mandate
Yes
Yes
Yes
Yes
M060 - Invalid Frequency
M073 – Mandate Incomplete
M072 – Data Mismatch with Mandate
M065 – 'Fixed' or 'Maximum' option not specified
on mandate
No
No
Information submitted by the Initiating Bank in the
data file to considered as final
No
No
Information submitted by the Initiating Bank in the
data file to considered as final
No
No
No
Yes
Information submitted by the Initiating Bank in the
data file to considered as final
The date of mandate acceptance would be
considered as the ‘Start Date’
M072 – Data Mismatch with Mandate
14
S.
Mandate Field
Possible Scenarios
No.
Qualifies
for Reject
(Yes/No)
Expected Mandate Return Reason/Remarks
and data file
18.
UpTo date / Until Cancelled
not provided on mandate form
(Customer has to provide only one of
the two information)
mismatch between Mandate
and data file
UpTo date is greater than 2099
UpTo date is less than or equal
to 2099
UpTo date and Until Cancelled
both selected on Mandate
19.
Customer Signature
not provided on mandate form
Not matching with signature in
the CBS
Signature authority mismatch
with A/c operation instruction
20.
Customer Name
Company ‘FOR’ stamp not
available on mandate. (Case
where required as per bank
policy)
not provided on mandate form
Yes
Yes
Yes
M062 – Period of Validity not mentioned or invalid
end date
M072 – Data Mismatch with Mandate
M062 Period of validity not mentioned or invalid
date
No
Yes
Yes
Yes
Yes
M062 Period of validity not mentioned or invalid
date
M004 – Drawers signature required
M003 – Drawers Signature Differs
M003 - Drawer’s signature differs
M008 – Company 'FOR' stamp required
Yes
Yes
M057 – Payer Name Mismatch
15
S.
Mandate Field
Possible Scenarios
No.
Qualifies
for Reject
(Yes/No)
name varies 100% from CBS
information (close match with
CBS name needs to be evaluated
Expected Mandate Return Reason/Remarks
M057 – Payer Name Mismatch
Yes
by the bank)
16
Other Possible Scenarios and corresponding action to be taken by the bank
Possible Scenarios
Sr.
no.
1. KYC not completed by customer
2. Alterations on the mandate
3. A/c type ‘CC’
4. A/c accessible only from home branch
5. Mandate amount considered high by
the bank
Qualifies for
Reject
(Yes/No)
No
Expected Mandate Return Reason
Yes
M007 – Alteration requires drawers
authentication
Yes (only in case
where nature of
debit transaction
is not permissible
as per the ‘CC’
account
arrangement)
No
No
Remarks
Qualifies for reject only in case where
the Account is blocked by the bank for
non-KYC compliance, in which case
mandate can be rejected with M041 –
Account Blocked
M043 – Nature of debit not allowed
in A/c type
The bank is expected to make
arrangement to get mandate verified by
the concerned branch, if required.
Mandate in addition to being a payment
instruction to the bank, is also an
instruction to the corporate’s by its
customer to collect payment from his
a/c. The terms of payment and the
amount is an arrangement between the
corporate and its customer, with the
bank expected to facilitate the financial
transaction in the payment
arrangement.
17