Millions of payments transactions are taking place in the banking system daily. These payments are done by the individuals, corporate and government; and clearing them will be a huge task. For convenience, the clearing of these payments should be done electronically. Such an electronic clearing system was developed by the National Payment Corporation of India (NPCI) and it is known as National Automated Clearing House (NACH).
NACH is a web based platform to facilitate interbank, high volume, electronic transactions for Banks, Financial Institutions, Corporates and Government. It basically functions like an electronic clearing service available especially for banks.
NACH was launched by the National Payment Corporation of India (NPCI). It is very useful to clear bulk and repetitive transactions that takes place among banks.
NACH System is used for making bulk transactions towards distribution of subsidies, dividends, interest, salary, pension etc. and also for bulk transactions towards collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium etc.
NACH has two wings – ECS Credit and ECS Debit. Similarly, local, regional, national ECSs are also operational.