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Understand the Meaning and Benefits of NACH Facility

Understand the Meaning and Benefits of NACH Facility


Before NACH Payment Facility introduced, people used to make payments of their bills and other expenses by visiting the respective office or bank. Sometimes they used to forget the due date of their payments whether it was an EMI or any other bill payment. But the NACH facility has put some ease on these payment modes. NACH stands for National Automated Clearing House facility that was introduced by the National Payments Corporation of India. This facility is used by Financial Institutions, Banks, and Corporations to do the repeated and periodic interbank high-volume transactions. In simple words, NACH Payment is the standing instruction given to the institution to debit a certain amount of payment on a specific due date and repeatedly until the will of the individual.

Benefits of NACH Facility

Now you must explore the benefits of this payment system that is mainly used for the collection of bulk payments of bills like telephone bills, electricity bills, water bills, loan EMIs, Mutual Funds Investments, and insurance premium payments. Some institution uses this system to distribute subsidies, salary, pension, dividends, and interests.

  • NACH Payment system is automated and there is no need for a manual process.
  • This facility is fast and it saves time for both the bank and the individual.
  • You will not have to monitor your payments like utility bills, phone bills, credit card bills, and others because they are managed by the institution itself and debited from time to time.
  • The bank doesn’t have to depend on other banks for the cheque clearing because they debit the payment from the Payee’s account automatically.
  • All the payments take less time to get processed.
  • The payment of salaries, pensions, and dividends are distributed on the defined dates without any delay.
  • The customer service has been improved after the introduction of the NACH Facility.
  • You can authenticate the NACH facility online and there is no need for the paperwork.
  • Now, the bank can collect the payment of EMIs and other interest through this facility without doing any paperwork.
  • The chances of errors are also low in this facility because the whole process is automated.
  • All the transactions are safe and secure done through this facility.
  • The bank can do the transaction in no time because the process is fast.

How NACH Facility Works?

We have taken an example for the payment of credit card bills. Suppose you have the last date 15th of every month for making the payment of the credit card bill but you forget every time to pay and an extra fee is charged on that amount.

So, with the help of the NACH facility, you will have to define the date and your credit card bill will be paid automatically to the bank on the defined date. Even if you forget the due date, the bank will debit the amount of the credit card bill through the NACH Facility. But make sure, you have a sufficient balance and it must be more than your credit card bill amount in your savings account.


After exploring the benefits of the NACH facility, you can make use of it. It will be fast, safe, and secure and would be beneficial for you if have the habit of forgetting the bill payment dates. The payment will be debited automatically every month and you will just have to activate the NACH facility in the beginning only once.


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