Whether it’s a loan EMI or a bill payment, automatic payments not only allow you to keep track of your financial obligations but also ensure on-time payments. You must, however, first activate the NACH (National Automated Clearing House) mandate in order to enjoy the convenience of automatic payments. In this blog, we will learn how to activate the NACH mandate and cancel it.

What is a NACH Mandate?

National Automated Clearing House or NACH Mandate is permission granted by a customer to a bank, government agency or financial institution to debit or credit the money from their account automatically. It is a digital facility that automates recurring payments such as utility bills, loan EMIs, and more.

Developed by the National Payments Corporation of India (NPCI), NACH is a centralised, electronic system that supports high-volume, routine interbank transactions. As a consumer, it allows you to track your financial obligations and make sure that you pay on time.

NACH mandate gives a bank, service provider or lender the authority to automatically withdraw funds from your bank account at a specified frequency (as with an EMI or utility bills). Suppose you have activated the NACH mandate for your home loan EMI of ₹30,000 per month on the 6th of every month. The bank or NBFC will automatically withdraw ₹30,000 every month on the 6th day.

How To Set up NACH Mandate

The key benefit of the e-NACH mandate is that it eliminates the need for manually paying the bills and EMIs. It not only reduces human error but also improves financial tracking among individuals and businesses. Here is how you can register for the e-NACH mandate:

1. Start the Mandate Registration: To start the registration process, you must connect with the loan or service provider. The provider then starts to initiate the e-NACH mandate registration process. Details of the mandate will be sent to you via mobile (SMS), email, and WhatsApp.
2. Review Mandate Details: You must now click on the mandate information message and check the pre-filled information of EMI amount, date of collection, tenure and other crucial information.
3. Enter Your Bank Account Details: You must now enter your bank account details, such as your name, account number, and IFSC code. Next, choose an authentication option from net banking, debit card or Aadhaar-based eSign.
4. Authenticate the Mandate: If you are using Aadhaar eSign, you will be redirected to the NPCI eMandate Gateway. Enter your Aadhaar number here, and authenticate the account by providing the OTP you have received on your Aadhaar-registered phone.
5. OTP Verification and Bank validation: Your bank now verifies the mandate request against your account details. If the details match, the bank sends an OTP to the registered mobile number to complete the verification.
6. Mandate Activation: As soon as you enter the OTP, the bank or lender registers and activates the e-NACH mandate. You will be notified of successful registration.
7. Seamless Automatic Payments Begin: Once activated, the service provider is mandated to automatically debit your account on due dates as per the mandate. It can be loan EMI, utility bills, insurance premiums or subscription payments.

Why Should You Register for a NACH Mandate?

Here are all the benefits of the NACH mandate that make it essential to register for the NACH mandate:

• Make Timely Payments: Automatic facility ensures that your bills and EMIs are always paid on schedule. This helps you establish a solid payment history, avoid late penalties, and safeguard your credit score.
• No Paperwork: Setting up an NACH mandate is entirely digital. It eliminates the need to fill out several forms and paperwork or wait in long lines at the bank.
• Simple to Modify or Cancel: You might pre-close a loan, change banks, or switch jobs. In these situations, you can easily cancel the NACH mandate.
• Inclusive for Rural and Semi-urban Consumers: One of NACH’s best advantages is that it serves both rural and semi-urban consumers.

What Happens If Your EMI Fails?

If there is not enough money in your bank account, the transaction will fail. In case the EMI fails, the bank or lender will levy a penalty for every bounce if your NACH mandate fails due to not having enough funds.

How to Change or Cancel a NACH Mandate?

The new NPCI guidelines for 2025 make it simple to modify, suspend, or cancel NACH mandates online. Here is how you can cancel an NACH mandate:

1. Call the Lender or Service Provider: Start by notifying the bank or utility provider of the NACH mandate change or cancellation.
2. Get a Mandate Modification or Cancellation Form: Fill out a form for the change or cancellation of mandates online with accurate details.
3. Submit Required Documents: You may be required to provide supporting documents with the form, like a cancelled cheque or new account details, or a written letter of request.
4. Verify Your Identity: Next, you must authenticate your request using OTPs or digital authentication to authorise the change or cancellation.
5. Bank Processes the Request: The bank now validates the NACH mandate change or cancellation. The process would require between a few days and a few weeks, depending on the lender.
6. Confirmation: After processing, your bank and/or service provider will confirm the change or cancellation of the NACH mandate to you.

Note that the mandate may only be changed or cancelled by the registered client and not by anyone else. Lenders may also terminate inactive e-mandates if they are not used for a very long period of time. In accordance with RBI circulars, you may also file a modification request to alter your payment amounts, due dates, or any account information.

Charges and Penalties for NACH Mandate

Here are all the charges and penalties that are associated with the NACH mandate:

• EMI bounce: Penalty for failed mandate auto-debit.
• Bank bounce fee: Additional charge per failed transaction. Fees can be around ₹200–₹500 per bounce.
• Late payment penalty: Extra interest if the EMI is paid late. Impact on Credit Score: If your EMIs fail, it will negatively impact your credit score.
• Service Disruption: Until the payment is settled, utility companies or subscription services may stop providing their services.

RBI Guidelines for NACH Mandate

Here is a summary of key RBI guidelines for the NACH mandate:

• All the banks and financial institutions are required by the RBI to provide simple mandate establishment and cancellation online using a secure login, an OTP, or an app.
• Customers should give specific consent prior to automated debit via NACH.
• Mandates may be issued either physically or electronically (e-mandate), and there must be a thorough verification and authentication.
• Banks should provide means of seeing, editing or cancelling mandates at any time.
• To provide transparency, customers must be alerted about mandate registration and transactions.
• Customers can raise disputes in case of unauthorised debits.
• Any data and transactions involving NACH should be strongly encrypted and privacy-compliant.
• Banks that do not provide online change/cancel (CASR) services are prone to the risk of losing access to the NPCI platform as of June 2025.

The NACH mandate is a simple yet effective way that makes loan payback management dependable and stress-free. It allows you to issue a one-time instruction for automatic debit and credit. There are, however, still consequences when you fail to pay EMI. This is why you must always be aware of the process, charges and penalties.

Frequently Asked Questions (FAQs)

1. How long does it take for a NACH mandate to become active?

If you set up an e-mandate using net banking, debit card, or Aadhaar authentication, it usually gets activated within 24 to 48 hours. A physical mandate where you sign a paper form may take anywhere between 5 to 10 working days, depending on your bank’s verification process.

2. Can I cancel the NACH mandate after my loan is closed?

Yes, once your loan is fully repaid, you can request the cancellation of your NACH mandate to ensure no deductions take place.

3. What happens if my EMI bounces due to insufficient balance in my account?

When a mandate fails, the lender may charge you a penalty (bounce charges) or levy an additional penalty interest. These missed payments are reported to credit bureaus like CIBIL, which can lower your credit score.

4. Can I switch from NACH to UPI AutoPay personal loan repayments?

Yes, you can. Some lenders have started supporting UPI AutoPay personal loans for recurring transactions.

5. How do I update my NACH mandate if I change my salary account?

If you switch jobs or banks, you must inform your lender and submit a fresh mandate request with your new account details.

6. How safe is it to share my bank details for a NACH mandate?

The process is completely secure as it is managed under NPCI’s encrypted payment framework, and banks require your consent via e-sign, OTP, or Aadhaar authentication. Neither the lender nor any third party can debit more than the amount or frequency specified in your mandate.

7. What is the maximum amount that can be debited under a NACH mandate?

Depending on the type of mandate, the maximum debit amount for an NACH mandate ranges:

• ₹50 lakh for security mandates
• ₹10 lakh for recurring payments
• ₹1 lakh for debit card

8. How is NACH different from standing instructions (SI) in banks?

Standing instructions (SI) are account-specific and work only if both your loan and bank account are with the same bank. NACH, on the other hand, is interoperable across all banks in India, making it more flexible for customers who take loans from NBFCs or fintech lenders while maintaining accounts elsewhere.

9. Can I raise a dispute for an unauthorised debit through NACH?

Yes, if an incorrect or unauthorised debit takes place, you can immediately raise a dispute with your bank. NPCI’s rules ensure that the issue is investigated and the wrongly debited amount is reversed within a defined time frame.

10. Can multiple NACH mandates be active on the same bank account?

Yes, you can set up multiple NACH mandates for different purposes, such as one for a personal loan, another for insurance premiums, and another for SIPs.