PROJECT REPORT NPCI by Ravi Kiran

1 | H O W T O B O O S T N A C H D E B I T R a v i K i r a n
1.1 Details of Organizations
Background
Reserve Bank of India, after setting up of the Board for Payment and Settlement Systems
in 2005, released a vision document incorporating a proposal to set up an umbrella
institution for all the RETAIL PAYMENT SYSTEMS in the country. The core objective
was to consolidate and integrate the multiple systems with varying service levels into
nation-wide uniform and standard business process for all retail payment systems. The
other objective was to facilitate an affordable payment mechanism to benefit the
common man across the country and help financial inclusion.
IBA's untiring efforts during the last few years helped turning this vision a reality.
National Payments Corporation of India (NPCI) was incorporated in December 2008 and
the Certificate of Commencement of Business was issued in April 2009. It has been
incorporated as a Section 25 company under Companies Act and is aimed to operate for
the benefit of all the member banks and their customers. The authorized capital has been
pegged at Rs 300 crore and paid up capital is Rs 100 crore so that the company can
create infrastructure of large dimension and operate on high volume resulting payment
services at fraction of the present cost structure.
Profile
National payments corporation of India (NPCI), an umbrella organization for operating
all the retail payment and settlement t systems in India, is promoted by 10 banks under
the aegis of the IBA with majority shareholding by public Sector banks, The Board
constitutes of Shri Balachandran M as the Chairman, Nominee from Reserve Bank of
India, Nominees from ten core promoter banks, two Independent Directors and Shri
A.P.Hota, Managing Director and Chief Executive Officer, NPCI. The Board for
Regulation and Supervision of Payment and Settlement Systems (BPSS) at its meeting
held on September 24, 2009 has approved in-principle to issue authorization to NPCI for
operating various retail payment systems in the country and granted Certificate of
Authorization for operation of National Financial Switch (NFS) ATM Network with
effect from October 15, 2009. NPCI has deputed its officials to IDRBT Hyderabad and
NPCI has taken over NFS operations from December 14, 2009. Membership regulations
& rules are being framed for enrolling all banks in the country as members so that when

the nation-wide payment systems are launched, all would get included on a standardized
platform.
A Technical Advisory Committee has also been constituted with two eminent professors
of IIT, Mumbai. Prof.N.L.Sarda is the Chairman and Prof.G.Sivakumar is the Co-
Chairman of the Technical Advisory Committee. Members in these committees are
drawn from banks at the level of Deputy General Manager/ Asst. General Manager.
PRODUCT & SERVICES
1. NFS-National Financial Switch
The Institute of Development and Research in Banking Technology (IDRBT),
Hyderabad had been providing ATM switching service to banks in India through
National Financial Switch . IDRBT decided to hive off its operational role on ATM
switching to have focus on research and development and was looking for a suitable
arrangement for shifting this business to some national level payment system
organization. National Payments Corporation of India (NPCI) considered this as an
opportunity and started discussions with IDRBT on the feasibility of taking over.
The Board for Regulation and Supervision of Payment and Settlement systems (BPSS) at
its meeting held on September 24, 2009 approved in-principle to issue authorisation to
NPCI for operating various retail payment systems in the country. Reserve Bank of India
also issued authorisation to NPCI to take over the operations of National Financial
Switch (NFS) from the Institute of Development and Research in Banking Technology
(IDRBT) on ‘as is where is basis’ on October 15, 2009. NPCI took over NFS operations
from December 14, 2009.

2. RuPay-Domestic Card payment network
RuPay, a new card payment scheme launched by the National Payments Corporation of
India (NPCI), has been conceived to fulfill RBI’s vision to offer a domestic, open-loop,
multilateral system which will allow all Indian banks and financial institutions in India
to participate in electronic payments.
“RuPay”, the word itself has a sense of nationality in it. “RuPay” is the coinage of two
terms Rupee and Payment. The RuPay Visual Identity is a modern and dynamic unit.
The orange and green arrows indicate a nation on the move and a service that matches its
pace. The color blue stands for the feeling of tranquility which is the people must get
while owning a card of the brand ‘RuPay’. The bold and unique typeface grants solidity
to the whole unit and symbolizes a stable entity.
Benefits of RuPay card
The Indian market offers huge potential for cards penetration despite the challenges.
RuPay Cards will address the needs of Indian consumers, merchants and banks. The
benefits of RuPay debit card are the flexibility of the product platform, high levels of
acceptance and the strength of the RuPay brand-all of which will contribute to an
increased product experience.
1. Lower cost and Affordability:
Since the transaction processing will happen domestically, it would lead to lower cost of
clearing and settlement for each transaction. This will make the transaction cost
affordable and will drive usage of cards in the industry.
2. Customized product offering:
RuPay, being a domestic scheme is committed towards development of customized
product and service offerings for Indian consumers.
3. Protection of information related to Indian consumers:
Transaction and customer data related to RuPay card transactions will reside in India.
4. Provide electronic product options to untapped/unexplored consumer segment :
There are under-penetrated/untapped consumers segments in rural areas that do not have

access to banking and financial services. Right pricing of RuPay products would make
the RuPay cards more economically feasible for banks to offer to their customers. In
addition, relevant product variants would ensure that banks can target the hitherto
untapped consumer segments.
5. Inter-operability between payment channels and products:
RuPay card is uniquely positioned to offer complete inter-operability between various
payments channels and products. NPCI currently offers varied solutions across platforms
including ATMs, mobile technology, cheques etc and is extremely well placed in
nurturing RuPay cards across these platforms.
3. IMPS-Immediate Payment Service
Currently majority of interbank mobile fund transfer transactions are channelised
through NEFT mechanism. Under NEFT, the transactions are processed and settled in
batches, hence are not real time. Also, the transactions can be done only during the
working hours of the RTGS system.
In the above context, NPCI has carried out a pilot on mobile payment system initially
with 4 member banks viz State Bank of India, Bank of India, Union Bank of India and
ICICI Bank in August 2010. Yes Bank, Axis Bank and HDFC Bank have joined this
pilot in month of September, October and November 2010 respectively. Immediate
Payment Service (IMPS) public launch happened on 22nd November 2010 by Smt.
Shyamala
Gopinath, DG RBI at Mumbai and this service is now available to the Indian public.
IMPS offers an instant, 24X7, interbank electronic fund transfer service through mobile
phones. IMPS facilitate customers to use mobile instruments as a channel for accessing

their bank accounts and put high interbank fund transfers in a secured manner with
immediate confirmation features.
Objectives of IMPS
 To enable bank customers to use mobile instruments as a channel for accessing their
banks accounts and remit funds
 Making payment simpler just with the mobile number of the beneficiary
 To sub-serve the goal of Reserve Bank of India (RBI) in electrification of retail
payments
 To facilitate mobile payment systems already introduced in India with the Reserve
Bank of India Mobile Payment Guidelines 2008 to be inter-operable across banks and
mobile operators in a safe and secured manner
 To build the foundation for a full range of mobile based Banking services.
4. CTS-Cheques truncation System
The New-age inter-bank cheque clearing system is created by NPCI which obviates the
physical movement of cheques and affects the clearing by NPCI which the physical
movement of the cheques between the banks and the clearing house is curtailed and is
replaced by the electronic image of the original cheque. CTS is faster, Secure, and makes
possible T+1 clearing for cheques presented anywhere in India and provides host of
other benefits like operational efficiency, reliability and convenience to customers. NPCI
has commenced CTS in all –Southern, Western and Northern-grids that have a combined
daily presentment volume up to 29.34 Lakh transaction
5. NACH-National Automated Clearing House
National Automated Clearing House (NACH)” for Banks, Financial Institutions,
Corporates and Government a web based solution to facilitate interbank, high volume,
electronic transactions which are repetitive and periodic in nature. NACH System can be
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.
National Automated Clearing House (NACH) is a centralized system, launched with an
aim to consolidate multiple ECS systems running across the country and provides a
framework for the harmonization of standard & practices and removes local
barriers/inhibitors. NACH system will provide a national footprint and is expected to
cover the entire core banking enabled bank branches spread across the geography of the
country irrespective of the location of the bank branch.
With the implementation of NACH system, NPCI intends to provide a single set of rules
(operating and business), open standards and best industry practices for electronic
transactions which are common across all the Participants, Service Providers and Users
etc. NACH system also supports Financial Inclusion measures initiated by Government.
NACH system facilitates the member banks to design their own products and also
addresses specific needs of the banks & corporates including a refined Mandate
Management System (MMS) and an online Dispute Management System (DMS)
coupled with strong information exchange and customized MIS capabilities
The NACH system provides a robust, secure and scalable platform to the participants
with both transaction and file based transaction processing capabilities. It has best in
class security features, cost efficiency & payment performance (STP) coupled with
multi-level data validation facility accessible to all participants across the country.
NACH’s Aadhaar Payment Bridge (APB) System, developed by NPCI has been helping
the Government and Government Agencies in making the Direct Benefit Transfer
scheme a success. APB System has been successfully channelizing the Government

subsidies and benefits to the intended beneficiaries using the Aadhaar numbers. The
APB System links the Government Departments and their sponsor banks on one side and
beneficiary banks and beneficiary on the other hand.
6. AePS-Aadhaar Enabled Payment System
In order to further speed track Financial Inclusion in the country, Two Working Group
were constituted by RBI on MicroATM standards and Central Infrastructure &
Connectivity for Aadhaar based financial inclusion transactions with members
representing RBI, Unique Identification Authority of India, NPCI, Institute for
Development and Research in Banking Technology and some special invitees
representing banks and research institutions.
The working group on MicroATM standards & Central Infrastructure & Connectivity
has submitted its report to RBI. As a part of the working group it was proposed to
conduct a Lab level Proof of concept (PoC), integrating the authentication & encryption
standards of UIDAI, to test the efficacy of MicroATM standards and transactions using
Aadhaar before they are put to actual use. The PoC was successfully demonstrated at
various venues.
AEPS is a bank led model which allows online interoperable financial inclusion
transaction at PoS (MicroATM) through the Business correspondent of any bank using
the Aadhaar authentication.
The four Aadhaar enabled basic types of banking transactions are as follows:-
 Balance Enquiry
 Cash Withdrawal
 Cash Deposit

 Aadhaar to Aadhaar Funds Transfer
The only inputs required for a customer to do a transaction under this scenario are:-
 IIN (Identifying the Bank to which the customer is associated)
 Aadhaar Number
 Fingerprint captured during their enrollment
The only inputs required for a customer to do a transaction under this scenario are:-
 IIN (Identifying the Bank to which the customer is associated)
 Aadhaar Number
 Fingerprint captured during their enrollment
 Balance Enquiry
 Cash Withdrawal
 Cash Deposit
 Aadhaar to Aadhaar Fund Transfer
 Gateway Authentication Services
1.2. BRIEF STUDY ON NACH
National Automated Clearing House (NACH)” for Banks, Financial Institutions,
Corporates and Government a web based solution to facilitate interbank, high volume,
electronic transactions which are repetitive and periodic in nature. NACH System can be
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.
National Automated Clearing House (NACH) is a centralized system, launched with an
aim to consolidate multiple ECS systems running across the country and provides a
framework for the harmonization of standard & practices and removes local
barriers/inhibitors. NACH system will provide a national footprint and is expected to
cover the entire core banking enabled bank branches spread across the geography of the
country irrespective of the location of the bank branch

With the implementation of NACH system, NPCI intends to provide a single set of rules
(operating and business), open standards and best industry practices for electronic
transactions which are common across all the Participants, Service Providers and Users
etc. NACH system also supports Financial Inclusion measures initiated by Government.
The NACH system facilitates the member banks to design their own products and also
addresses specific needs of the banks & corporates including a refined Mandate
Management System (MMS) and an online Dispute Management System (DMS)
coupled with strong information exchange and customized MIS capabilities
The NACH system provides a robust, secure and scalable platform to the participants
with both transaction and file based transaction processing capabilities. It has best in
class security features, cost efficiency & payment performance (STP) coupled with
multi-level data validation facility accessible to all participants across the country.
NACH’s Aadhaar Payment Bridge (APB) System, developed by NPCI has been helping
the Government and Government Agencies in making the Direct Benefit Transfer
scheme a success. APB System has been successfully channelizing the Government
subsidies and benefits to the intended beneficiaries using the Aadhaar numbers. The
APB System links the Government Departments and their sponsor banks on one side and
beneficiary banks and beneficiary on the other hand.
NACH PRODUCTS
 APB-Aadhar Payment Bridge
 EBT-Electronic Benefit Transfer
 ACH Credit
 ACH Debit
 NACH Credit(CECS)
NACH DEBIT
NACH Debit & Its Unique Features
 NACH-Debit provides a better & efficient Mandate based debit services to the banks.

Automated processing and exchange of mandate information electronically with well-
defined timelines for acknowledgement/confirmation. Each mandate needs to be
accepted/authorized by the debtor bank before the User can initiate a transaction
 Each mandate is uniquely identified by Unique Mandate Reference Number (UMRN)
which makes tracking of multiple mandate details easier for customers.
 MMS would allow processing of debtor and creditor initiated mandates. MMS would
allow processing of e-mandates as well as paper mandates, where e-mandates would
consist of only data file upload while paper mandates would consist of mandate image
and Data file uploads.
E-mandates can be initiated only by a debtor bank
 Bank can leverage on the existing CTS instrument scanning infrastructure for
scanning and maintaining repository of the mandates images
Mandate initiation process from Sponsor Bank
Fig.No:1.2.a Mandate initiation process from Sponsor Bank

Mandate initiation process from Destination process
Fig.No:1.2.b Mandate initiation process from Destination Bank
Mandate Validation Concept
 Field Mandate management to be hosted by NPCI on optional basis
 Key Mandate variables will be stored and validated at the transaction leg
 Bank gets a simple debit request
 Fields proposed to be validated at NPCI
 If the input transaction fails above validations, NPCI will reject those transaction
at Sponsor Bank end itself.
 UMRN – Active/Non-Active
 Customer Account Number
 Destination Bank IFSC/MICR
 Amount
 Maximum Amount
 Start Date
 End Date/Until cancelled
Benefits for the Banks
 Standardization and digitization of mandates
 Simplification of the mandate acceptance and recording process

 Will result in reduced operational cost for the banks and its clients
 Will result in higher revenues for the banks and its clients as the scope of services
expand pan India
 Complete audit trail of the mandate during its lifecycle
 Unique identifier number allocated to each mandate (UMRN)
 Secure web access for file upload/download, dissuading the concept of regional
NCC/Clearing House submissions
 Mandates can be processed by the member for any branch across the country
 Minimal time taken to activate the Mandate – same day processing possible
NACH Credit
NACH Credit is an electronic payment service which uses ‘Account Number’ and IFS
Code for routing the transactions to the destination banks. The input file of ACH Credit
contains 306 characters. This payment service is used by institutions for affording bulk
credits to a large number of beneficiaries for the payment of dividend, interest, salary,
pension etc. by raising a single debit to the bank account of the user institution.
 Replication of existing NECS format on NACH Credit with enriched validations
 Acceptance and rejection based on Individual transaction records in a file
 Supports Internet/NPCI Net Access
 Supports Host to Host Integration
 Supports Multiple File Formats ( Existing 156 as well as New 306 Character files)
 Online end to end Monitoring of Payment Files
 Provides Direct Corporate Access (DCA) – With Bank Control
 Online Dispute Management System

NACH Credit Process Flow
Fig.No:1.2.c NACH Credit Process Flow
NACH Credit Process – Sponsor Bank
Sponsor Banks to obtain User Code & User Name for each Corporate, as maintained by
them with RBI.NPCI to generate User Code and User Name and share the same with
Sponsor Banks who in turn will share the same with Corporate. Sponsor Banks will
receive the payment file from Corporates.
Sponsor Banks will validate the file (file format, availability of fund, create mandate) &
uploads the input file to NACH from 10:00 am to 6:00 pm a day prior to the settlement
date
Sponsor Banks will inform the Corporates on the processing status
Direct Corporate Access (DCA)
 NPCI provides user credentials to DCA & Sponsor bank
 Corporates can directly upload the files in NACH system
 Respective Sponsor Bank approves the file
 Uploaded file validated against the mapped Government Department/Corporate
registration number
 DCA user uploads the file (maker) & Sponsor bank user approves the file (checker)
 After Sponsor bank’s approval, NACH will validate the file and ACK will be
generated and sent to DCA


1.3 AIM AND OBJECTIVE
Aim: To analyse the Debit market and conclude that How to Boost or
Enhance the NACH debit.
Objective:
The objectives of the project are:
 Preliminary study to gather the requirements to frame questionnaires for primary
research on NACH Debit and expectations
 Cold visits to the service branches of the banks and corporates on NACH Debit
and Expectations
 Collecting the primary data and feedback from experts during the visits of service
branches of banks and corporates
 Analysing the primary data to do internal and external factor evaluation matrix
 Analyse the feedback to identify major rivalry competitive product and service of
NACH Debit.

LITERATURE REVIEW
A wide range of payment instruments viz. cheque, debit/credit cards, prepaid instruments etc.
and retail payment channels viz. NEFT, NECS, ECS(Debit), IMPS etc. are available in the
country. Even non-banks have been permitted to issue prepaid payment instruments and
effect P2P domestic money transfers in a limited way.
While the existing systems are safe and robust, the existing systems did not fully address the
needs of a consumer to pay the utility bills, school/university fee etc. for the following
reasons -
a. Lack of interoperability in the bill payment processes requiring the consumers to
make payments at the respective Billers Own Collection Point or his agent.
b. Consumer preference for payment at BOCPs, which provides him instant receipt
confirming the payment of the bill and lack of trust in the agents.
c. A vast majority of the consumers have no access to other modes of electronic
payments or are wary of using them.
Bill payment is a major component of the retail payment transactions. It is estimated that over
30,800 million bills are generated each year in the top 20 cities in the country. The Cash and
Cheque collections constitute over 90 percent and electronic payments through ECS etc.
continue to be low.
Intermediaries/Aggregators play an important role in the bill payment system in India. They
provide payment collection services to the billers through various agent outlets and also offer
reconciliation services to the billers. However, the intermediaries/aggregators operate on the
basis of bilateral agreements with the billers. There is a lack of coordinated industry initiative
to develop a common interoperable bill payment system. There is, therefore, a need for a
GIRO payment model for India which will be inter operable, enable third party payments and
also provide for acceptance of payment in cash and cheque as well.

Among the Giro models operated globally, the Boleto Bancario System in Brazil and the
SADAD system in Saudi Arabia provide for acceptance of bill payments at various bank
branches, agent outlets etc. The Boleto Model is mainly a paper-based model, involving
generation of a bar-coded Boleto slip by a biller/merchant which is presented at the agent
outlet by a consumer at the time of making payment. The SADAD model is electronic.
Major Recommendations
A GIRO based payment system christened “India Bill Payment System” (IBPS) may be
designed and implemented in the country.
The participants in the IBPS would include Billers, Intermediaries/Aggregators, Banks,
Collection Agencies operating the IBPS points and the IBPS Points.
Initially, the Intermediaries/Aggregators may be permitted direct connectivity to the IBPS
system. In due course, the managers of IBPS may consider extending direct connectivity to
the billers, based on appropriate access criteria.
To enhance consumer confidence and acceptance of the IBPS, a service mark/logo should be
designed and displayed on the bills as well as the IBPS points, where payments are accepted.
The consumer should be provided with an instant receipt by the IBPS acknowledging the
receipt of the payment. The receipt should have the unique reference number generated by
the IBPS and also carry the IBPS service mark/logo. The payment made by a consumer
would be irrefutable.

Bill Presentment: Presently, there is no standardized system of bill data codification across
billers. IDRBT could develop an appropriate algorithm for the purpose of capture of bill data
for adoption by the billers. However, the IBPS should support the prevalent mode of bill
presentment which is largely paper based. The IBPS should also encourage electronic
presentment. Mobile number/ Aadhaar based mapping for payers and Billers could also be
undertaken while safeguarding the consumers’ privacy at the same time.
Bill Information flow: Payment information from the IBPS point should flow online to help
minimize reconciliation issues and customer grievances. The Billers/businesses which may
not be able to provide/support online flow of payment information may leverage the
aggregators’ capability in this regard.
Payment instruments/channels: The IBPS should enable acceptance of all payment
instruments including cash at the IBPS points. The system should provide for acceptance of
payments at any IBPS outlet, including bank branches, ATMs etc. It should also facilitate
acceptance of payments through IVRS, net banking and mobile banking.
Fund Settlement: Fund settlement for the transactions through the IBPS will be undertaken
by IBPS at periodical intervals. Non-bank entities will identify a sponsor bank and notify the
same to IBPS for the purpose of fund settlement.
Customer Support: IBPS will provide for online registration of complaints from customers
and the first point of contact (Bank Branches/Customer Service Point receiving the payment)
would provide customer support. But the customer grievances related to bill payment will
have to be attended to by the Biller and IBPS/Aggregator would provide the necessary
support to the Billers in this regard.
Engagement of Stakeholders: The proposed IBPS would require discussions with a large
group of billers, aggregators before implementation to ensure their acceptance and they
should be associated with the implementation and management of the system.
Management of the IBPS: Ideally, a separate organization needs to be set up to operate and
manage the IBPS in a professional manner and the operations of the organization should be
run on commercial lines. The organization should have an advisory body/ steering committee

with representations from billers, aggregators, banks, payment networks, customers and
others. The new organization could be authorized by the RBI under the Payment and
Settlement Systems Act, 2007, to operate the IBPS.
The committee is grateful to the aggregators, billers, service providers for their valuable
inputs and constructive suggestions. The committee had co-opted Mr K Sivaraman, General
Manager (Retd.), Reserve Bank of India into the committee. The committee wishes to place
on record its appreciation of his valuable contributions. The committee also received
unstinted support from Ms Radha Somakumar, Reserve Bank of India, Mr Praveen Singh,
State Bank of India and Mr Dilip Asbe, NPCI in coordinating the discussions of the subgroup
and in drafting of this report. Their support is deeply appreciated. The committee also thanks
officials of the Department of Payment and Settlement Systems, Reserve Bank of India who
participated in the discussions of the committee.
In the recent past, the RBI , the Government of India, banks and Payment Networks have
initiated significant measures aimed at encouraging electronic payments by securing the
payment systems across channels, and importantly, to widen the geographical reach and
accessibility of the payment systems. These have enabled easier and greater access to
payment systems beyond the normal banking channels’ reach. The Business Correspondent
model for banks, thrust by banks on the expansion of their ATM network and promotion of
alternate channels permitting non-banks to set up and operate white label ATMs, permitting
non-banks to undertake domestic money transfer activity, implementation of the Immediate
Payment Service (IMPS) are some of the initiatives in this direction.
Today, the payment system in the country offers a variety of payment instruments to the
public viz. cheques, credit cards, debit cards, pre-paid payment instruments, including mobile
wallets, issued both by banks and authorized non-bank entities etc. The payment delivery
channels available to customers/consumers include the traditional brick and mortar bank
branches, business correspondents of banks, ATMs, mobile banking, internet banking and
agents of various Billers/aggregators, who facilitate P2B payments. While the aggregators
play an important role in the collection of payments and reconciliation on behalf of large
Billers, inter-bank settlement of payment transactions are enabled by various authorized
entities. The RBI which operates the RTGS, the large value electronic payment platform,
NEFT, the retail electronic payment system, the NECS(Credit) which provides corporates the

facility to initiate bulk and repetitive payments like salaries, interest warrants, etc. and the
ECS(Debit), a mandate-based facility enabling utility bill companies to collect payments of
periodic and repetitive nature from their consumers in an efficient manner. The position of
entities authorized by the RBI to operate payment systems in the country as at March 2013.

3.1 SOURCES OF SECONDARY DATA
The sources of data collection are limited in this research as this technology is still evolving
and its effect would be certain and clear in the future. The secondary data given by various
sources may vary from each other. But most preferred in market are taken into consideration.
Various news articles and views of financial institutions and corporates are the major source
of secondary data.
3.2 RESEARCH DESIGN FOR PRIMARY DATA COLLECTION
The Project Study involves a questionnaire to the technical persons concerned with
operations, finance at service branches of Banks and Corporates. Moreover it involves in
visiting to Banks clearing houses and corporates head offices one to one interaction with
experts from service industries. (Please refer to Appendix 2 for the Questionnaire sample
for banks, Appendix 3 for the questionnaire sample for corporates. )
3.2.1 Sample Size
In the process of collection of responses from the experts in the industry using
questionnaire, the sample size was limited. However it also includes questionnaire
to the concerned persons from the Corporates like Insurance, Govt.Insititutions,
and NBFC
Moreover in the field survey the sample size was 35, that includes 23 banks (Public, private,
Co-operative, and foreign banks) and 12 corporate office based in Mumbai.
3.2.2 Processing of data and
The project study is an activity based therefore the inferences and interpretations are manual
and by external help of MS-Office package is being taken in the completion of the project.
3.2.3 Analytical framework for strategy formulation
For finding Strengths and Weakness of NACH
1. On average of rating to each observation of operations and services, top average
observation in table are considered as strengths of that particular payment platform

2. On average of rating to each observation of operations and services, bottom average
observation in table are considered as weakness of that particular payment platform
For Finding threads and opportunity from external competitive products
1. On average of rating or ranking to each observation of operations and services, top average
observation in table are considered as threads to new payment platform
2. On average of rating or ranking to each observation of operations and services, bottom
average observation in table are considered as opportunity to new payment platform
3.2.3.1 Rivals for NACH Debit in Foreign Bank
 The graph is made by the rating given by the foreign bank about the transaction which
is going in the existing platform which is showing the transaction going on the each
platform.
 In the above graph it is showing on the basis of the rating which is given by the
foreign bank.
 In which the 5 is the lowest rating a 1 is for the best .
 So for in the graph the major usage is done through the NACH and ECS which are
almost equal.
 The direct debits are used by the banks for the internal settlement that will be the
mutual understanding between the banks.
 ECS is the product of the Reserve Bank Of India in which the transaction is done
under the guidance of the RBI.
0
1
2
3
4
5
DirectDebit ExixtingECS NACH

 Whereas is the NACH Debit whose is transaction is done under the guidance of the
National Payment Co-Operation of India.
3.2.3.2Rivals for the NACH debt in the Co-Operative Banks
 Co-Operative Banks are using more ECS as compare to the Foreign Banks.
 Most of the transaction is done in the RBI ECS Debit that will make the NACH Debit
will be done but not in that high transaction volume.
 Direct Debit is there in the Co-Operative banks that is done for the internaly
settlement between the banks.
3.2.3.3Rivals For the NACH in the Public Sector Banks
 In the publicsectors banks the is the only sectors which are in the high transaction of
the NACH Debit.
 The direct Debit is used in the Public Sectors banks but not in the bulk amount.
0
1
2
3
4
5
DirectDebit Existing ECS NACH
0
1
2
3
4
5
R
a
n
k
i
n
g

 ECS(RBI)is the not that much use in the public sector.
3.2.3.4Rivals for the NACH Debit in Private Banks
 Privates banks as compare to the both publics and foreign banks are using the the
NACH in the large volume.
 NACH is given the best ranking in the existing the entire debit platform.
3.2.3.5Over all the Rivals for the NACH
 The overall rating of the rivals of the NACH debit is that all the banks indivisulay
using the NACH in the god decent volume but as there is not all the banks are on
boarded in the NACH debit that’s making the problem for the NACH.
0
1
2
3
4
5
R
a
n
k
i
n
g
0
1
2
3
4
5
Direct Debit ExistingECS NACH

 When all the banks are on boarded in the NACH Debit that will automatically make
the increase in the transaction in the NACH platform.
 The major banks will are still not in the NACH Debit is State Bank of India, Bank of
Maharashtra, and etc.
3.3 CONCLUSION FROM QUESTIONNAIRES
The conclusion derived from questionnaire and strategy formulation were that,
firstly the organization is in grow and build stage so its require increase in
investment and the product is given an impetus such that the product increases its
market share.
Secondly internally organization is strong and it is doing well when compared with
its competitive products and services but banks and their corporates are facing
some issues when comes to large volume of transactions. The major rivalry from its
competitive products and services are direct debit as per convenience channels
and ECS on the basis of large volume of transactions.

4.1 AN ANALYSIS OF FIELD SURVEY
The on field survey was also the other source of primary data collection. The target group is
service branches of banks and their corporates in Mumbai. The area of survey was limited to
Mumbai. The sample size of the target group for field survey was 35 that include 23 banks
and 12 corporates.
A customer presentation regarding NACH was made thereby following up their present and
future requirements. The Banks are a good sector of tapping new opportunities however it
comes with hurdles in its domain. Corporates are interested to do their and payments and
settlement through online mode instant with help of their aggregators/treasuries
4.2 CONCLUSION FROM THE FIELD SURVEY
The conclusions derived from the field survey were that, at present the banks are willing to
shift to NACH but process and operations of international standards with latest technology
making them complex to do large volume of transactions. Moreover their corporates have
global tie ups with the IT vendors, where there are feeling relax in existing payment and
settlement systems and hence large volume of transaction are not much happening when
compared with existing ECS. The other conclusions drawn from the field survey the
awareness of NACH is not much penetrated in market.

5.1 FINDINGS OF THE STUDY
The project findings of the study is that the organization is strong internally with their
operations and services, when comes to sustainability organization is in grow and build
quadrant. The services which NACH are providing are doing well when compared with
competitive product and services have some issues. The other finding from field survey is
that, the issues facing by the service branches of banks and their corporates to be live on
NACH and to do large volumes of transactions are :
Infrastructure:
 Many more banks are yet to switch 306 characters infrastructure.
 Regional head branch office of a bank might be live on NACH platform but their
sub branches and associate banks are yet to live.
 Even though 156 character infrastructure is available but various file formats and
size making banks complex when comes to large volume transactions.
Server Connectivity
 At times, portal connectivity issue making banks and corporate aggregators are
need to do multiples uploads and downloads such that acknowledgement from
destination banks getting delay.
 Bandwidth availability to banks especially public and private banks making
inconvenience for file transactions and processing.
 Problem in analysing outward return data, i.e., format of outward return file.
 Invoice bills reports raised by banks vs. bills given by clearing house are not tallying.
 Capturing of destination bank's UMRN in the transaction file resulting in delay in
transaction and Problem with Session timings.
 Most of the corporates are not much aware of NACH services even though their
sponsor and destination banks are live on NACH platform.
 Authorization and responsibility issues e.g.:-if destination bank didn’t send
acknowledge before TAT who is the responsibility for regarding same.
Boost of NACH:
 To boost the NACH debit it’s should go purely online means that the
mandate can also go online.
 As ECS debit is an very much old product the organisation is very
much used of it to make the major boost up of the NACH debit is done

when the major market of ECS is captured like as transaction going on
in Village area, major corporate ,government institutions , education
centres , and etc.
 Most of the corporates don’t know about the NPCI .it should make
more awareness towards the organisation if corporates knows about
the NPCI its make the major rise up of the product and services of the
NPCI.
 Major Banks should be on boarded that will make the rise in the
transaction in the NACH Debit.
 NACH should target the e-retail industry like as Flipkart, Ebay,
shopclue and etc.
Implementation of Online Mandate
5.1.1Process of Online Mandate
 Customer can fill the online mandate from their respective online
banking portal.
 Customer can go to the online mandate option and fill it with the
required information already listed there.

 After fill all the information it will generate the OTP (one time
online generated pin) which is send to the registered mobile
number.
 Alter all this process it will generate the gray scale and the black
white as per the NPCI format and send it for the process.
Transaction In ECS Debit and NACH Debit
Months ECS Debit NACH Debit
March-14 16150771 797
February-14 17411266 1,466
January-14 15850152 3,484
December-13 16126966 453
November-
13 15415071 321
October-13 15875190 245
September-
13 15875190 201
August-13 15875190 158
July-13 15875190 88
5.2 CONTRIBUTIONS AND SUGGESTIONS
The contributions and suggestions from the study are:
1) As organization is in grow and build stage, more focus should be laid on creating
awareness among non-Existing users of NACH so that they can easily live on NACH services
such that volumes of transaction will increase extensively
2) On the field survey, the major complaint is regarding file processing, server connectivity
and session timing, so the banks and corporates are expecting to resolve these issues
3) A friendly and flexible environment should be created to banks and corporates who are yet
to adopt 306 character infrastructures
4) Internally organization is strong, it should it take it as advantage and to be aggressive in
penetrating in market to reach its vision by 2020
5.3 LIMITATIONS OF THE STUDY
1) The sources of secondary data collection are limited in this research.

2) The primary data given by various sources may vary from each other, but most preferred
data in the market is taken into consideration.
3) Time limitation was there.
4) Since the level of a widespread deployments and its adoption is very less in India, the
future of this technology is still uncertain.
5) Number of competitors is very less. The major being Existing ECS and Direct debits.

SCOPE FOR FURTHER RESEARCH
There is definitely a scope for further research in the project study as due to the limitation of
time, the target group which was being identified was restricted corporates of NBFC,
Insurance and Mutual Funds. However the research can be extended to the domains like
Trading, Healthcare, BPO's and KPO's thereby evaluating their requirements on new payment
platforms. Moreover the technology would find its real status in near future in terms of
volume of transactions and reaching to every citizen of India

LIST OF FIGURES:
Fig. No Description Page. No
1.2.a Mandate Initiation process from sponsor bank 10
1.2.b Mandate Initiation process from destination bank 11
1.2.c NACH credit flow 13
3.2.3.1 Rivals for NACH Debit in Foreign Bank 21
3.2.3.2 Rivals for the NACH debt in the Co-Operative Banks 22
3.2.3.3 Rivals For the NACH in the Public Sector Banks 22
3.2.3.4 Rivals for the NACH Debit in Private Banks 23
3.2.3.5 Over all the Rivals for the NACH 23
5.1.1 Process of Online Mandate 27

Appendix1
Sample primary data entry spread sheet from customer of clearing house
Debit spread sheet 1:
Sn.No. Bank Bank Type
Online
Mandate
MMS Dispute Management System
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Problems while
uploading Mandates
GUI of NACH
Uploading Time
are enough
Customer
Services

Expectation
Recommendatio
n
Sponsor bank
Registered
Corporate
Complains from
corporate
Days for Mandate Confirmation Large Mandate Uploading More Session required or not

Appendix2
Questionnaire for How to Boost NACH Debit
Instruction
RATING
In the Scale of 5, encircle your Rating in the given Scale
 1 is for excellent
 2 is for good
 3 is for Average
 4 is for below Average
 5 is for okay
1. If Mandate (NACH Debit) gets online at what percentage of
your operational cost will/can reduce?
a. <30
b. Between 30 to 50
c. >50
d. No effect
Comments______________________________________
_______________________________________________
_______________________________________________
_______________________________________________
________________
2. Rate the MMS(Mandate Management system) in the scale of
5?
___________
Justify it
_____________________________________________
_________________________________________________
____

3. Do MMS (Mandate Management System) work as per your
expectation?
a. Yes
b. No.
Justify ___________________________________
4. Rate the Dispute Management System (DMS) in scale of 5?
___________
Justify It
_____________________________________________
_________________________________________________
_________________________________________________
________
5. Rate the NACH Debit as compare to the ECS Debit? (In scale of
5)
__________
Justify It
________________________________________________
___________________________________________________
___________________________________________________
__________
6. What kind of problem you face while uploading the Mandate?
i. _______________________________________________
____
ii. _______________________________________________
____
iii. _______________________________________________
____

iv. _______________________________________________
____
7. Is the Graphics User Interface (GUI) of the NACH Debit
Software is User friendly?
a. Rate it in scale of 5 __________
b. Any comments
_______________________________________________
_______________________________________________
_______________________________________________
____________
8. NPCI is given 2 hours for the uploading is that 2 hours are
sufficient for the uploading files?
a. Yes
b. No
If No justify
_____________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
_______________
9. Rate the Customer services of the NPCI?
___________________
Justify______________________________________________
___________________________________________________
___________________________________________________
_______________
10.What are your expectations from the NACH Debit?
___________________________________________________
___________________________________________________
___________________________________________________

___________________________________________________
____________________
11.Any recommendation to NPCI for Improving NACH Debit:
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
____________________
12.Is there is any Mandate filling issue is faced by you?
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
____________________
13.Are you a Sponsor Bank?
a. Yes
b. No
14.If yes how many Corporate are Registered with you
______________.
15.What kind of complain is coming from the corporate end?
i. _______________________________________________
____
ii. _______________________________________________
____
iii. _______________________________________________
____
iv. _______________________________________________
____

16. How many days you are taking for the confirmation of the
Mandate?
a. 1 day
b. 2 days
c. 3 to 5 days
d. More than 5 day
Justify why more than 5 days
_______________________________________________
_______________________________________________
_______________________________________________
____________
17.In your prospective why the NACH debit Mandate are not
uploading in a large volume?
___________________________________________________
___________________________________________________
___________________________________________________
___________________________________________________
____________________
18. As for the same day process mandates should upload on or
before the 12 afternoon do bank need one more session for the
uploading the mandates?
a. Yes
b. No
If yes, Justify
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
________________

APPENDIX 3
Sample Questionnaire for Corporates
Migrated and using NACH
1. Which are your sponsor banks?
 _________________________________________
 _________________________________________
2. Is there any aggregator /service provider?
 __________________________________________
 __________________________________________
Comments____________________________________________________
3. Current Business debit transactions in NACH?
 __________________________________________
 __________________________________________
4. What are the payment modes for processing your transactions? (Approximate %)
 Cash ______________%
 Cheques ______________%
 Direct Debit ______________%
 Existing ECS ______________%
 Online Payment Gateway ______________%
 RTGS/NEFT ______________%
 NACH ______________%
5. Monthly mandate volume/projections
 ECS _____________%
 NACH _____________%
 Direct Debit _____________%
6. Is there any challenges you are facing internally or from the bank/aggregator side?
 _____________________________________________
 _____________________________________________
7. Is there any challenges you are facing in the NACH Debit?
 ______________________________________________________
 ______________________________________________________
8. Any suggestions for the NACH Debit?
 ______________________________________________________
 ______________________________________________________

APPENDIX 4
Migrated and Not Using NACH
1. Which are your sponsor banks?
 _________________________________________
 _________________________________________
2. Is there any aggregator /service provider?
 __________________________________________
 __________________________________________
 Cash ______________%
 Cheques ______________%
 Direct Debit ______________%
 Existing ECS ______________%
 RTGS/NEFT ______________%
 NACH ______________%
 ECS ____________%
 NACH ____________ %
 Direct Debit ____________%
Comment____________________________________________
5. What are your payment collection channels?
 ________________________________________
 ________________________________________
 ________________________________________
 ________________________________________
6. Is there any challenges you are facing internally or from the bank/aggregator side?
 _____________________________________________
 _____________________________________________
 _____________________________________________
7. Are there any challenges you are facing in the NACH Debit?
 _________________________________________
 _________________________________________
 _________________________________________
 _________________________________________

APPENDIX 5
Non-Migrated
 Cash ______________%
 Cheques ______________%
 Direct Debit ______________%
 Existing ECS ______________%
 RTGS/NEFT ______________%
 NACH ______________%
 ECS ____________%
 Direct Debit ____________%
3. What are the channels you are using?
 _________________________________________
 _________________________________________
 _________________________________________
4. Are you facing any challenges in existing product?
 __________________________________________
 __________________________________________
 __________________________________________
 __________________________________________
5. Are you aware about the NACH Debit?
 Yes
 No
Comments___________________________________________
6. Which is your sponsor bank?
 ______________________________________________
 ______________________________________________
7. Is there any aggregator/service provider?
 ______________________________________________
 ______________________________________________
 ______________________________________________________
_____________________________

APPENDIX 6
Banks visited list
1. Abhyudaya Co-Operative Bank Ltd.
2. Corporation Bank Ltd
3. THE SHAMRAO VITHAL CO-OPERATIVE BANK
4. Mumbai District Central Co-operative Bank Ltd
5. Mahanagar Co-Operative Bank
6. The Royal Bank of Scotland
7. ICICI Bank Ltd.
8. Indusind Bank
9. Axis Bank
10.City Union Bank
11.Bank of Baroda
12.Canara bank
13.Dena Bank
14.Punjab National bank
15.Syndicate Bank
16.TMB
17.Standard Charted Bank
18.HDFC

APPENDIX 7
Corporates visited list
1. Mumbai University
2. Reliance Money
3. Radio Mirchi
4. RPG Enterprises
5. Savitha Oils
6. SBI General
7. ICIC prudential Mutual Funds
8. Oberai International School
9. Podar International School
10. Kotak Life Insurance
11. Birla Sun Life Insurance
12. UTI Mutual Funds

CHAPTER 9
BIBLIOGRAPHY
1. http://npci.org.in/
2. http://www.rbi.org.in/home.aspx
3. http://rbi.org.in/scripts/PublicationVisionDocuments.aspx?ID=678
4. http://www.nextbigwhat.com/neft-rtgs-imps-297/
5. http://balancedscorecard.org/Resources/StrategicPlanningBasics/tabid/45
9/Default.aspx
6. https://www.inkling.com/read/strategic-management-david-14th/chapter-
4/the-internal-factor-evaluation

PROJECT REPORT NPCI by Ravi Kiran

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