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by Rakesh Waghela

4.8 Mandates and repayments

What this stack does

Section titled “What this stack does”

Collect borrower repayments reliably; minimise bounces; maximise reconciliation accuracy; support both pull (NACH / UPI AutoPay) and push (borrower-initiated payment) flows.

NACH (paper + eNACH)

Section titled “NACH (paper + eNACH)”

National Automated Clearing House is NPCI’s bulk debit infrastructure. Lender presents a daily file of debits to sponsor bank, who routes via NPCI to borrower banks.

  • Paper NACH: physical mandate signed by borrower; submitted to sponsor bank; activated.
  • eNACH: digital mandate via Aadhaar OTP / debit card / netbanking; activated within hours.

eNACH preferred — faster, cheaper, lower fraud.

NACH cycle

Section titled “NACH cycle”
  • Presentation file generated daily (today’s debits).
  • Submission to sponsor bank by cut-off.
  • Processing by NPCI; routed to borrower banks overnight.
  • Acknowledgement file returned next day: success / bounce with reason codes.
  • Bounce fee applied per loan policy.
  • Re-presentation allowed per NACH rules (typically up to 3 attempts).

Mandate vendors

Section titled “Mandate vendors”
  • Digio DigiCollect — strong NACH / eNACH suite.
  • Razorpay — broad eNACH coverage.
  • Cashfree — payments + eNACH.
  • Setu — eNACH via APIs.
  • Decentro — fintech infrastructure.

Pricing proxy

Section titled “Pricing proxy”
  • Per active mandate: small monthly fee or per-presentation fee.
  • Per presentation: ₹2 – ₹15.

UPI AutoPay

Section titled “UPI AutoPay”

NPCI’s UPI-based recurring debit. Borrower approves once on UPI app; recurring debits up to defined limit.

Pros

Section titled “Pros”
  • Lower bounce rate than NACH (instant authentication; UPI account discovery).
  • Real-time debit.
  • Per-transaction approval can be opted in or skipped per merchant policy.

Cons

Section titled “Cons”
  • Mandate limit caps (NPCI-defined; periodically revised).
  • UPI account adoption by borrower — most do; some don’t.

Vendor

Section titled “Vendor”

Razorpay, Cashfree, Setu, M2P, NPCI via PSP partner.

Pricing

Section titled “Pricing”

Per debit: ₹0.50 – ₹5.

Virtual accounts

Section titled “Virtual accounts”

For borrower-initiated repayments, create a per-borrower virtual account under the platform’s master collection account. Borrower transfers to their virtual account; auto-allocated to their loan.

  • Reduces reconciliation overhead.
  • Eliminates “which loan did this payment cover” guesswork.

Vendor: Razorpay X, Cashfree, ICICI iLens, HDFC API banking, Yes Bank API, M2P.

Payment gateways (PG)

Section titled “Payment gateways (PG)”

For borrower-initiated payments via card / netbanking / UPI / wallet.

Vendor: Razorpay, Cashfree, PayU, Paytm Business, Billdesk.

Pricing

Section titled “Pricing”
  • Per transaction: 1.5% – 2.5% for cards; ~0.5% – 1.5% for netbanking; ₹0 – ₹5 for UPI.

BBPS (Bharat Bill Payment System)

Section titled “BBPS (Bharat Bill Payment System)”

Borrower can pay via any BBPS-enabled UPI app / netbanking / agent. Useful for cash-collection in tier 2 / 3 markets.

  • Lender onboards as a “biller” with BBPS.
  • Each loan account becomes a billable item.
  • Borrower pays via any BBPS channel.

Vendor: NPCI BBPS via sponsor bank or vendor (Setu, Bharat BillPay agents).

Escrow / nodal / current accounts

Section titled “Escrow / nodal / current accounts”
  • Collection account — single bank account where all repayments land.
  • Disbursement account — for outflows.
  • Co-lending escrow — joint account with co-lending partner; settles per agreement.
  • Nodal account — RBI-regulated for certain LSP / aggregator scenarios.

Sponsor bank choice matters — bank with strong API and NACH operations (HDFC, ICICI, Axis, Yes, IDFC FIRST, Kotak).

Payout rails

Section titled “Payout rails”

For disbursement and other outflows: IMPS / NEFT / RTGS / UPI.

Vendor: RazorpayX Payouts, Cashfree Payouts, Setu Bridge, M2P, Decentro, Karza, sponsor bank’s own payout API.

Pricing

Section titled “Pricing”

Per payout: ₹2 – ₹10 typically.

Reconciliation

Section titled “Reconciliation”
  • Daily reconciliation of expected vs actual on each account.
  • NACH ack file parsed into success / bounce.
  • PG settlement file matched to internal records.
  • Exception queue for unmatched.

Compliance implications

Section titled “Compliance implications”
  • NPCI rules for NACH, eNACH, UPI AutoPay.
  • RBI Payment System Data Storage if any payment data — typically applies; data stored in India.
  • Digital Lending Guidelines — funds flow directly between borrower and RE.
  • Outsourcing MD — vendor governance.

Build vs buy

Section titled “Build vs buy”
  • NACH / eNACH / UPI AutoPay rails: Buy. NPCI / sponsor-bank integration is complex.
  • Payment gateway: Buy.
  • Virtual accounts: Buy.
  • Reconciliation engine: Build (your data, your rules).
  • Bounce handling and re-presentation logic: Build.