Mutual fund distributors will soon be able to register SIPs faster as National Automated Clearing House (NACH) is set to become functional 24x7 from August.
The NACH system, which is used to register SIPs with banks, currently operates only on those days when banks are open.
“NACH is currently available only on the days when banks are functional. In the interest of customer convenience, and to take advantage of the availability of RTGS on all days of the year, it is proposed to make available NACH on all days of the week throughout the year, effective August 1, 2021," RBI said in a release on Friday.
MFDs expect the new rules to bring down the turnaround time to register SIPs through NACH. The process currently takes 7-10 working days depending on the investor's bank.
"Once this gets implemented, the processing time should come down by 30%," said Deepak Jaggi, co-founder and MD of Satco Wealth Managers.
MFDs expect the reduced registration time will lead to a higher conversion rate. They say many a time investors used to back out by the time NACH registration got completed. This generally happens during tax season.
"Due to the long waiting time, a lot of investors used to change their minds in-between. The reduced waiting time will help MFDs complete more transactions," said Pallav Chatterjee, Chief Operating Officer, Jain Investment.
According to him, reduced registration time will also cut down chances of MFDs forgetting to take the SIP transaction forward once the NACH registration got complete.
