NPCI has implemented the National Automated Clearing House (NACH), a web based solution for Banks, Financial Institutions, Corporate and Government to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature.
It is a centralised system, launched with an aim to consolidate multiple ECS systems running across the country and provides a framework for the harmonization of standard & practices and removes local barriers/inhibitors.
It will provide a national footprint and is expected to cover the entire core banking enabled bank branches spread across the geography of the country irrespective of the location of the bank branch.
It also supports Financial Inclusion measures initiated by Government, Government Agencies and Banks by providing support to Aadhaar based transactions.
NACH is a much superior, robust and scalable platform for the following reasons:
- The prevalent Electronic Clearing Service (ECS) in India is available at around 89 centers in the country. While it is operated by the RBI at 15 centers, it is operated by commercial banks at the remaining centers.
- The ECS model lacks a standardized operating model, uses manual processes and has other inherent challenges such as inconsistent timelines around post transactional query management and servicing.
- The new centralized NACH solution is expected to consolidate the current multiple ECS systems and provide a framework for removal of the local barriers / inhibitors.
- The platform is a robust, secure and scalable with both transaction and file based transaction processing capabilities.