HSBC Completes First Transactions on India’s New NACH Payments System
HSBC has become the first bank in India to complete live corporate client transactions on the country’s National Automated Clearing House (NACH) debit payment platform.
Telecoms group Vodafone India and asset management companies, HSBC Asset Management and Reliance Capital Asset Management (RCAM) are the first customers to use the new Indian NACH infrastructure.
HSBC commented that India’s economy has undergone rapid growth in recent years resulting in the need for a more sophisticated payments infrastructure. The creation of this new system, complemented by other innovations such as Interbank Mobile Payment Service (IMPS), also operated by the National Payments Corporation of India (NPCI) – not to mention its innovative identity verification scheme from few years go – mean that India now has the robust payment platforms it needs to continue to grow.
The development of the advanced Indian national payment platform is a prime example of the significant strides that many emerging economies are making in the development of their financial infrastructure, leap-frogging many western countries where antiquated legacy technology systems still sometimes dominate.
“These recent developments enable companies in India to maximise their operating efficiency and adopt liquidity management structures that are in line with international practices – and that many global organisations expect,” commented Navin Gupta, head of payments and cash management, HSBC India. When discussing the NCPI infrastructure and other advancements in the country.
“The system allows global banks, like HSBC, to help corporates looking to do business in India to manage their cash effectively, and in-line with a broader global cash management strategy. This system marks a shift in India’s cash management capabilities, as the country now has a payments system that makes it profoundly easier for businesses to compete.”
India’s NACH system, an initiative by the NPCI, is a new payments system which incorporates much best practice functionality from existing systems around the world. With the NACH system now in place, a significant upgrade on legacy platforms is now evident, and the first customers are benefiting from faster transaction settlement, wider coverage and superior mandate management. The end result is greater efficiency and wider bank branch coverage across India – bringing a large nation onto one, consistent and highly advanced system.
“The NACH Debit is an effective way to collect funds from our consumers spread across remote locations in India, as compared to electronic clearing system (ECS) debits,” said Sundeep Sikka, chief executive officer (CEO) of one of the launch customers, Reliance Capital Asset Management. “Not only are mandates now registered within 3-4 days, as compared to 21-25 days previously, it also now covers all IFSC-enabled branches across India.”
“The same day transaction information also allows for the locking-in of the funds at the current day’s net asset value (NAV), as compared to ECS debits where we receive information only after 3-4 days.”