In an hour-long meeting with the market regulator held today in Mumbai, MF CEOs requested SEBI Chief Ajay Tyagi to look into the matter of increasing rejection of National Automated Clearing House (NACH) mandates in PSU banks, said two senior officials familiar with the development.
NACH is a one-time registration process, which gives flexibility to investors to invest lump-sum, and through SIP, without having to make individual payments each time.
A CEO who attended today’s meeting said that fund houses have expressed concern over growing rejection of NACH mandate in PSU banks. “NACH rejection is deterrent to the growth of the industry. We have requested the SEBI chairman to approach RBI on this issue,” the CEO said.
Explaining why banks reject NACH mandate to Cafemutual, a senior official from the operations department of a large fund house said that NACH rejections are quite common in PSU banks. “Over the last six months, private banks and some large public sector banks have improved their systems and processes to approve mandates. However, the NACH rejection rate in most of the PSU banks is very high. These banks cite reasons like ‘signature not clear’, ‘signature mismatch’ or ‘incomplete form’ to reject the NACH mandate. Since banks have to answer within T+5 days, they usually reject it even if the form is complete or signature is appropriate to get some more time,” the fund house official added.
Fund officials apprised the SEBI chief of the growth and milestone the industry has achieved over the past few years, like growth in AUM and SIP inflows. Fund officials also talked to him about the growing popularity of the ‘Mutual Fund Sahi Hai’ campaign.
