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What is an e-mandate?

What is an e-mandate?

E-mandate is a digital payment service introduced by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI). It aims to simplify the sending and receiving of recurring payments for both individuals and businesses. If you set an e-mandate process, you give the bank a standing instruction to debit a specified amount on a scheduled date automatically. This payment can be for EMIs, SIPs, insurance premiums, monthly or annual subscriptions, etc. 

This article explains the e-mandate’s meaning, its features and benefits, registration process, eligibility criteria, and types to help you make the most of it in your financial journey.

Features & benefits of e-mandate

An e-mandate is a digital authorization that automates recurring transactions, including EMIs, SIPs, insurance premiums, or subscriptions. It offers a secure, paperless, and convenient way for individuals and businesses to manage payments efficiently.

  1. Paperless and convenient process

E-mandates are set up completely online through Aadhaar, debit card, or NetBanking authentication. This eliminates paperwork, saves time, and provides users with the convenience of managing all mandates digitally without visiting a bank.

  1. Automated and timely payments

Payments are auto-debited (debit mandate) or credited (credit mandate) on the scheduled dates after the e-mandates are approved. This ensures transactions are executed on time with no payments getting missed.

  1. Real-time and secure authorization

E-mandates use real-time, OTP-based verification for instant approval. Advanced encryption and two-factor authentication ensure safe, error-free, and tamper-proof processing.

  1. Bank integration and flexibility

The e-NACH platform integrates e-mandates across multiple banks. This means users can flexibly choose the payment frequency they like – daily, monthly, or annually.

  1. Streamlined financial management

E-mandates make budgeting and financial planning easier by automating recurring payments. Users can track and manage multiple payments from a single account. This makes expense and cash flow management better.

  1. Efficiency and sustainability

E-mandates reduce the need to collect payments manually and improve liquidity, which leads to better management of operations for businesses. Moreover, the paperless process reduces carbon footprint and promotes sustainability.

The e-mandate registration process

Registering for an e-mandate is a simple, fully digital process that allows automatic payments for recurring expenses such as EMIs, insurance premiums, or subscriptions. The process can be completed in just a few easy steps:

Step 1: Pick the e-mandate process

Visit the service provider’s website or app and choose the e-mandate or auto-debit option for recurring payments.

Step 2: Enter bank details

Provide your basic banking information, such as account number, IFSC code, and bank name, to link your account securely.

Step 3: Authorize the mandate

Authenticate the setup using secure methods like OTP verification, NetBanking login, or debit card credentials. This step confirms your consent to automate payments.

Step 4: Activation and auto-debit

Once verified, the e-mandate becomes active. Payments are then auto-debited from your bank account on the scheduled dates as per the agreed amount, ensuring timely and hassle-free transactions every time.

E-mandate in the banking sector

In the context of banking, e-mandates are instrumental. They are utilized for various purposes, including the automation of Equated Monthly Installments (EMIs), insurance premiums, and mutual fund SIPs. The primary advantage in the banking sector is the reduction in administrative tasks and the assurance of timely payments.

It represents a shift towards more customer-centric banking, where the need for manual instruction for each transaction is eliminated, thus streamlining financial operations.

Eligibility criteria for e-mandate

The eligibility criteria for e-mandate are as follows:

  • The applicant must have a valid Aadhaar Card, with the bank account and Aadhaar Card linking completed.
  • The chosen bank or financial institution must be authorized to provide NACH services.

Besides, you will need to submit the following documents to proceed with the e-mandate process registration.

  • A duly filled e-mandate form
  • Aadhaar card
  • Bank account details
  • Mobile number registered with the bank account and the Aadhaar card

Now that you know the eligibility criteria and document list, it is vital to understand that an e-mandate request can be rejected in the following scenarios:

  • If the bank account details provided are incorrect
  • If the bank doesn’t offer NACH service
  • If the folio number or associated information is inaccurate

Types of e-mandates

There are two types of e-mandate processes. Let’s understand how both work.

  1. Debit mandate

Once you approve this mandate, the bank automatically debits the required amount from your account for the specific payments. For instance, if you purchase an annual subscription of Rs. 1,099 for an online streaming platform, the bank will deduct this amount every year on a pre-decided date. Similarly, if you start a monthly SIP of Rs. 1,000, the bank will invest the amount every month. This way, you don’t miss out on making timely payments. Your streaming platform subscription doesn’t expire, and your investment keeps growing.

  1. Credit mandate

The credit mandate ensures that you collect all your payments automatically. When you register and approve such a mandate, you release the burden of remembering the due dates from your head and avoid the need to follow up with customers. However, remember to read the terms and conditions before confirming the mandate.

What is the limit of e-mandates that I can set through a single bank account?

The concept of e-mandate is pivotal in the ongoing digital transformation of the financial sector. It represents a significant advancement in managing recurring payments, offering a blend of security, convenience, and efficiency. As we continue to evolve towards more automated financial services, the role of e-mandates is set to become more prominent, making it an indispensable tool in the arsenal of modern financial management strategies.

E-mandates are not just a technical upgrade but a reflection of the changing dynamics in customer-bank relationships, where ease and security are paramount. By adopting e-mandates, both individuals and businesses can significantly enhance their financial operations, ensuring a smoother, more reliable, and hassle-free transactional experience.

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FAQs

What is the limit of e-mandates that I can set through a single bank account?

You can set up multiple e-mandates through a single bank account, but each bank can have its own transaction and amount limits. Generally, the maximum limit per transaction is Rs. 1 lakh for debit card-based e-mandates and Rs. 5 lakh for NetBanking mandates.

What will happen if there is insufficient balance in the bank account?

If your account has insufficient balance during an e-mandate transaction, the payment will fail, and the bank or service provider may charge a penalty or late fee. Repeated failures can impact your services with the provider or your credit score in the case of loan repayments.

Is it possible to set up an e-mandate as an option for collecting recurring payments?

Yes, e-mandates can be set up to automate the collection of recurring payments such as EMIs, insurance premiums, SIPs, or subscription fees. They simplify payment collection for businesses and ensure deductions are made from customers’ accounts on time without manual intervention each month.

How much time is needed for e-mandate processing?

The e-mandate process takes one to two working days once authorization is completed. The exact time may vary depending on the issuing bank, authentication mode, including Aadhaar, NetBanking, or debit card, and the National Automated Clearing House (NACH) processing timelines.

How is an e-mandate different from an ECS mandate?

An e-mandate is an electronic and paperless version of the ECS mandate, allowing real-time authentication using Aadhaar or NetBanking. On the other hand, for ECS mandates, you need to submit documents in physical form and wait for manual verification. This results in longer processing times and inconvenience.

Why is an e-mandate needed?

An e-mandate is required to automate, secure, and streamline the payment process. It helps to avoid missed due dates and simplifies financial management. It also makes payment processing more convenient for both individuals and businesses by eliminating the effort of manual payment execution.

How can I settle my loan faster?

You can settle your loan faster by making part-pre-payments whenever possible, opting for shorter tenure, increasing your EMI amount, and applying surplus gains, such as bonuses, toward the loan balance. Regular pre-payments reduce principal and save on total interest cost.

What is the difference between e-NACH and e-mandate?

E-NACH is a platform launched by the National Payments Corporation of India (NPCI) to facilitate electronic mandate registration across all banks. E-mandate refers to the process of setting up recurring payments online.

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