Integration of eNACH System for Loan Recovery in SCARD Bank

Introduction

Synergic Softek Solutions specializes in providing core banking systems (CBS) for co-operative banks. Our CBS application is successfully running in one of the State Cooperative Agricultural and Rural Development Banks (SCARDB) .Recently, we have integrated an eNACH (Electronic National Automated Clearing House) API system provided by a nationalized bank for loan recovery purposes in this bank. This integration has streamlined the loan repayment process, enhancing efficiency and customer convenience.

Background

SCARDBs and ARDBs play a crucial role in providing long-term credit for agricultural and rural development projects. These cooperative societies are vital in supporting rural economies by offering financial services tailored to the needs of farmers and rural entrepreneurs.

eNACH System

eNACH, an initiative by NPCI (National Payments Corporation of India), facilitates automated recurring payments. It allows banks, financial institutions, and service providers to collect periodic payments such as loan EMIs directly from customers' bank accounts, ensuring timely and hassle-free transactions.

Implementation Flow

• User Interaction:

1. A user (loanee member of the bank) accesses a web portal and supplies their loan account number.
2. The portal fetches account details such as member name, type of loan, loan period, EMI amount, loan repayment start date, and end date.

• Mandate Registration:

1. Upon verifying the details, the user clicks on "Process." The system calls the mandate registration API provided by NPCI.
2. The user verifies the mandate using their debit card PIN or net banking password.
3. Once verified, the API returns a UMRN (Unique Mandate Reference Number), which the portal records along with the loan account number.

• Data Recording and Reporting:

1. At the end of the day, the CBS system receives the registered mandate details.
2. An admin from the bank receives a report on the loans registered for eNACH.

• Admin Portal:

The web portal includes an admin dashboard displaying:

1. Number of accounts registered.
2. Number of accounts that failed to register.
3. Reports on accounts with debit amount and debit date information.

Benefits

• Efficiency: Automated loan recovery reduces manual intervention and errors.
• Convenience: Users can easily register mandates online, ensuring timely loan repayments.
• Transparency: Detailed reports and dashboards provide clear insights into loan recovery statuses.

Conclusion

The integration of the eNACH system for loan recovery has been a significant enhancement to our CBS application. It has provided a seamless and efficient method for managing loan repayments, benefiting both the banks and their customers. This successful implementation showcases our commitment to delivering innovative solutions that drive financial inclusion and development in rural areas.