National Automated Clearing House (NACH) mandates:
A major change is being effected in mutual fund SIP mandate rule from October 1, 2023. Now, a mandate for SIPs (Systematic Investment Plans) will be issued for a maximum duration of 30 years starting from the date of issuance. The central system will only accept mandates with a duration of 30 years or less, ensuring validation.
National Automated Clearing House (NACH) mandates provide automated instructions to banks for SIP deductions in mutual funds.
Currently, investors can opt for a Perpetual SIP in mutual funds by stating 'until cancelled' on the mandate. However, due to the recent change, the 'until cancelled' option is no longer in use. Now, investors must indicate an end date for the mandate, and this end date should not surpass 30 years from the issuance date.
Starting from October 1, 2023, a mandate's final collection date (end date) becomes mandatory, unlike before when perpetual SIPs had no end date. This change aligns with a circular issued by the National Automated Clearing House on August 18, 2023.
Investors should be aware that Perpetual SIPs established or initiated before September 30, 2023, will remain unaffected. These new requirements won't apply to existing SIPs, as the circular takes effect on October 1, 2023. NACH, in its circular, has made it clear that "this is applicable for all forms (physical as well as electronic) of mandates."
