The National Payments Corporation of India (NPCI) on August 18, 2023, issued a circular regarding the Penalty for high %age of ACH debit returns.
All the stakeholders are advised to take the following measures:
• Restrict the representation of the returned transactions to 2 times (1 presentation + 2 representations).
• Representation of a returned transaction can be done only after 3 days from the date of return.
• Representation is to be done only after confirmation from the customer concerned on the availability of the balance.
• In case of repeated returns:
o User institutions should reach out to the customer and ensure that the presentation is resumed only after confirmation is received from the customer for honouring the debit transactions.
o Destination banks should review the operation of the account, advise the customer to maintain sufficient balance and in the event of no improvement follow the regulatory guidelines for handling such accounts.
The following measures shall be implemented in a phased manner as per the schedule provided below:
• Phase I - With effect from October 01, 2023:
o Additional charges of Rs. 1 per return transaction are to be levied on corporate with returns above 50%.
• Phase II - With effect from January 01, 2024:
o Rs. 5 per return transaction for corporate with returns above 50%. Additional Charges will be for transactions over and above the threshold ie.50%
• Phase III - with effect from April 01, 2024:
o The corporates with return transactions above 30% will be barred from registering new mandates.
o The utility code will be barred from registering further new mandates until the returns are brought down below the 30% threshold.
[Circular No. NPCI/2023-24/NACH/007]
