NACH (National Automated Clearing House) is the NPCI system for bulk and recurring bank debits and credits. A customer registers a debit mandate, physically on paper or online as an e-mandate through net banking, debit card or Aadhaar authentication, naming the biller, the maximum amount, the frequency and the validity period. The biller then presents debits on the due dates, and the customer can cancel the mandate through its bank.
How it works in India
The supplier, through a sponsor bank or a collection platform, sends the buyer a mandate link. The buyer approves it on its bank's page, and the mandate is registered with NPCI, usually within a few days. On each due date, the supplier presents a debit up to the mandated maximum, and the buyer's bank pays or returns it with a reason code. Returns for insufficient funds are visible immediately, so follow-up can start the same day.
Mandates are well suited to payment plans, dealer instalments, rentals, retainers and annual maintenance contracts.
Why it matters for getting paid
The weakest point in any settlement is the second instalment. A mandate removes the need for the buyer to remember, approve and initiate each payment. For larger amounts it replaces post-dated cheques, with less paper and faster information on returns. Where an instalment is returned unpaid, the supplier still has its original claim, and may have a separate remedy for the dishonoured debit.
How FundRaksha uses it
FundRaksha Collect sets up NACH and UPI Autopay mandates alongside automated payment reminders, for a 1% fee on amounts collected. When FundRaksha Legal negotiates a settlement, the instalments are often collected through a mandate, so the plan does not depend on the buyer's goodwill. See e-mandate collections or start at https://collect.fundraksha.com. A free consultation can plan the right setup.
Worked example (hypothetical)
A Coimbatore motor manufacturer agrees with a distributor to clear ₹18,00,000 of overdue invoices in six monthly instalments of ₹3,00,000. The distributor registers an e-NACH mandate from its current account with a maximum of ₹3,00,000 per month for six months. Each month the debit is presented on the 5th. The fifth debit is returned for insufficient funds; the manufacturer re-presents it on the 12th after a call, and it clears. All ₹18,00,000 is collected, and the Collect fee at 1% is ₹18,000 (₹3,000 per instalment).
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.