Benefits of E-NACH facility in Legal Documentation

Legal Documentation has been understood as any document that shows some contractual relationship entered by two or more parties or which grants some right to the entitled person named in such document. Though the process of documenting is the core activity of any operation is considered a very detailed and elaborate one. Often which requires a lot of resources and multiple interventions of human touch. In the era of technology, where every other material need has been transmuted into a smart and automated machine, the task of documenting does not lack itself behind. E-document has been introduced as an outcome of the research that has been put into the betterment of the conventional process which was focused mainly on paperbased working and involving human intervention and was carried out at almost all of the platforms in the business world.

Electronic documentation for the purpose is a process of recording information in a manner that requires a computer or other electronic device to display, interpret and process the same to make available to the users as and when requested for. In contrast to a paper document, an electronic document can contain non-sequential data as hypertext connected by hyperlinks. Legal documentation for the matter is a structure representing the terms of any contract or agreement or declaration between two or more parties. This structure elucidates the legitimacy of the matter presented and agreed upon by the interested parties and at the same time guarantees the authenticity of the structure in the eyes of law.

Any payment system requires verification from both sides of the transaction I.e the customer bank as well as the vendor bank. Wherein an Automated system of payment at the same time initiates the transactions of nature which are recurring at equal intervals of time, for a specified period leading to a deduction of the targeted amount from the bank account of the customer, this is known as e-mandate. Here the applicant requests a subscription of the automated service by using an electronic medium such as digital signature for the signing of the document, the submission of which is made online only via the system, instead of following the conventional aspect of documenting. Member banks in this situation adheres to access criteria guidelines the NPCI may prescribe from time to time. The mandates and transactions submitted to NACH may prescribe based on the recommendations of the controller of certifying authority/Institute for development and Research in Banking Technology or any other guidelines that may be prescribed by the Reserve Bank of India.

The participant banks are expected to retain copies of E-Mandate records in electronic form. The participants to ensure that electronic records of documents accurately reflect the information contained with the document and that both the electronic record and a record of the authentication can be accurately reproduced for future reference. The preservation period is ten years from the date of submission of the mandate by the customer. Thus documentation for every single transaction will not be necessary. E-NACH being the centralised payment processing system lets you manage bulk payment not limited to one bank but across multiple banks and manage different utility bills, payment for SIPs, premiums, donations, credit cards bills or any similar recurring payment. It is a defined workflow and thus reduced time.

Hereunder such nature of transactions that previously required initial authentication of Applicant's status and other details for submission will now through e-mandate require only one-time authentication of the applicant. As in the case of ECS where the process is manual and thus takes more time to process and verification issues. The registration process itself has not changed, the only thing you need to do is collect the NACH form instead of the older ECS form and attach the required documents mentioned in the form.

Documents in case of ECS have a probability of higher rejection ratio whereas in ENACH you get them once and the same can be used for future reference and due to much less paperwork the rejection ratio is also less. Further in scenarios where payment settlement gets laborious taking 2-3 days for clearance it gets settled on the same day in case of ENACH. This tends to reduce activation time and reducing the cost of operation of the transaction. Bank on the other hand, saves time and minimise their dependencies on cheques or other such paper-based transactions. Large organisations on the same time strand to gain as they can provide better customer service by disbursal of bill clearances, salaries and pensions on time without having to undergo numerous steps. Also, organisations can take advantage of automatic crediting of allowance benefits or scholarships etc. For them, also, the paper-based transactions are reduced, thus facilitating their other work.

NACH is a mandate which requires a one-time registration process, like ECS, that provides flexibility to investors who can make a single payment for any lump-sum investment or through Systematic Investment Plan (SIP). However, the time taken for the registration process is said to have been reduced in NACH. Thus it proves to be a fruitful product in case of business and organizations requiring legal documentation predominantly.