NPCI payment processing issue – Impact on your SIP

A technical snag since 01 Feb 2021 at the National Payments Corporation of India (NPCI) has delayed processing payments for various financial transactions including payments setup for SIPs. This has impacted the allocation of units to your mutual fund accounts. The delay in the processing of the amounts will typically lead to a minor loss since we in an upward trend. The higher the NAVs the lesser the number of units you get.

Broken Chain from

What is NPCI

NPCI’s logo should be very well known to those who use BHIM app for payments. From the website of NPCI

National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.

NPIC website

The NPCI’s National Automated Clearing House (NACH) is responsible for all digital money transfers. NACH provides electronic mandate platform to register mandates facilitating paper less collection process for the corporates and banks. Most of the SIPs setup go through the NPCI’s NACH system and potentially accounts for more than 70% of the total transactions. Not just SIPs, All NACH-related debits in your bank account – SIPs, EMIs, regular insurance premiums – that are recurring in nature, are handled by NPCI

NACH is used extensively by several apps & investment sites – Example, MFU (Mutual Fund Utilities) uses its EpayZee and the end point of NPCI’ NACH. MFU earlier this week came up with a notice

We understand from our payment aggregator that due to some server issue at NPCI, there is a delay in PayEezz mandate registration and also in receipt of money for transaction orders reported since 1st Feb 2021. Even though your bank account is already debited our service provider is yet to receive clear funds from NPCI. This issue is not yet fixed.

Email from MFU

What are not impacted

SIPs that have been initiated directly with a bank are not impacted. These have a different channel of communication and hence does not fall under NACH. However, every few have setup such transactions, as most go through NACH via various apps.

Other transactions such as NEFT and RTGS transfers are also not impacted. These again have a different transaction route. However, many again donot use these features as they are not readily provided by many utilities. MFU also has NEFT/RTGS features, however, the setup of this takes time and also is not very convenient like NACH.

What has created more confusion

The recent SEBI order mandates that units can be allotted to investors only post realisation of the amounts before the cutoff time, which is 3 PM IST for equity mutual funds. Since NACH deducting the amounts from the bank accounts, but unable to credit it, investors are losing both of the bank interest as well as NAV units (assuming an uptrend in the market.) If the SEBI mandate had not been there, the units would have been allotted on the assuming that settlement will anyway happen.

Anything to worry about

First, this is an issue only while deducting the amount and not for redemption. If you wish to withdraw you can do so, and you will get your amounts in your bank. This delay is only for the purchase of new units where an SIP goes through NACH of NPCI. Should you worry? No need, a few days here and there even for an HNI’s SIP bucket will not make a major difference.

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Krishna Rath is a SEBI Registered Investment Adviser, and since 2015 has been educating netizens on investments and insurance. Krishna is a fee only SEBI RIA and is Odisha's first SEBI RIA. With background in IT, Krishna is changing the advisory space with new innovations in AdvisoryTech.

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