How Do You Update Your Personal Loan Account Mandate?

Do you often miss your EMIs? Yes. Quickly submit a mandate or a formal authorization to your bank or lender to ensure an automatic debit of a certain amount, typically an EMI, from your account. NACH or e-mandates carry out these processes in India, and the NPCI (National Payments Corporation of India) regulates the system.

However, besides submitting and updating the mandate on your account, also known as the NACH (National Automated Clearing House) or E-mandate, it is essential, especially when switching bank accounts for automatic and timely EMI deduction.

Moreover, timely updates ensure a timely monthly deduction of your payment without manual intervention and reduce the risk of missing a payment that you forget due to your busy schedule. No wonder it protects your credit score and helps you avoid penalties.

The Types And Their Features

There are typically two types of mandates.

1. Physical:A paper-based instruction where the borrower must fill out a form and attach it to a canceled cheque.

2. E-Mandate: This is the digital version where you authorize automated online debits via OTP or net banking. Most lenders and borrowers prefer this method because it is faster and more secure.

Why Does Updating the NACH Mandate Matter?

A mandate is critical for maintaining uninterrupted loan repayments. It is mainly helpful when you decide to change your bank accounts. If you have closed an existing bank account or switched to a new one for better benefits, your mandate must reflect this change.

If your mandate is not updated, your lender will try to debit the amount from the old account when your EMI falls due. It can lead to a failed transaction or an EMI bounce. Such failures are not merely missed repayments but affect your financial record, too. You might have to face:

• Cheque bounce charges

• Penalties for late payment

• Negative impact on your credit score

What more? Repeated failures to pay the EMI can affect your future borrowing prospects because lenders will see your failed repayments as a sign of financial irresponsibility. Hence, it might be difficult for you to borrow in the future.

Moreover, mandates make your work easier. You don't have to remember EMI dates and worry about manually transferring funds every month.

Documents You May Need For Updating

• Proof of ID (Aadhaar, PAN, etc.)

• Bank statement with a canceled cheque for your new account (or the passbook).

• Filled out the NACH/ECS form

How Does A Sample Online Process Look?

Most banks/financial institutions follow the process below. However, make sure you read the instructions thoroughly before updating.

• Log in to your account via app, portal, or service link

• Go to manage mandate/bank details. Select "change."

• Select your loan account and enter new details

• Upload the canceled cheque and verify through OTP

• Authenticate to complete the e-mandate

• Track the information sent by senders via SMS or email

Do you have any ongoing loans currently? Then, quickly update your mandate and save yourself from an EMI bounce. Also, remember to check regularly to ensure the mandate activates before the upcoming EMI debit.