Currently, any auto-debit instructions given by the account holder does not get processed on days the bank is closed like Sundays, bank holidays and gazetted holidays. Also, because most companies use NACH for salary credits etc these also do not happen on bank holidays.
From August, do make sure to maintain your account balances on the day of the debit to avoid any penal charges related to low-balances and debit not taking place from the account. Currently, if the balance in your account on a Sunday was not sufficient to meet the debit but due to credits the balance became sufficient for the debit on a Monday then your debit would not fail as it would not happen on a sunday. However, this will not be the case from August.
The RBI governor, Shaktikanta Das, made this announcement on June 4, 2021 during the central bank’s bi-monthly monetary policy announcement. As per the RBI governor, this decision has been taken to enhance customer convenience.
As per the RBI statement:
NACH is currently available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, it is proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021.
It may be recalled that over the past couple of years, the RBI has made electronic funds transfer services like NEFT and RTGS available on a 24X7 basis to promote digital transactions in the country.
What is NACH?
NACH is a bulk payment system operated by NPCI which facilitates one-to-many credit transfers, such as payment of dividend, interest, salary, pension, as also collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds, insurance premium, etc.
Once the NACH instructions are given to a bank, fund house or a biller like a mobile service provider, the customer is not required to issue cheques every month. Just like an ECS mandate given to the bank, in the NACH facility, the money is automatically deducted from the customer’s account depending on the instructions given.
“NACH has emerged as a popular and prominent digital mode of direct benefit transfer (DBT) to large number of beneficiaries. This has helped transfer of government subsidies during the present COVID-19 in a timely and transparent manner,” the RBI governor stated today.