What is an e Mandate - How Does It Work?

The finance world is getting transformed by digitalization, every step of the way. From taking a loan to paying it back – all kinds of financial activity have become a matter of few taps. And it doesn’t stop here. Banks, NBFCs and many other institutions have upgraded their payment facility with the implementation of eMandate.

Whether it’s your personal loan repayment or a monthly SIP, it’s an important responsibility to make payments on the due date. This determines your overall financial health. And setting your repayments on eMandate can help you stay on top of it.

Keep reading this blog to explore all there is to know about it and never miss any kind of payment again.

eMandate Meaning:

eMandate or electronic mandate is a payment facility that can streamline all your recurring payments. This is a secure and convenient facility that allows banks and any type of non-banking organization to successfully debit a particular amount from the registered bank account of their users. RBI and National Payments Corporation of India (NPCI) introduced this payment service which is helping many organizations collect money.

Activating this payment facility is even beneficial for the users as they don’t have to make any manual payments or remember their due dates which helps them stay on top of their financial health.

Types of E-Mandates

Based on the method of functioning, there are two types of e-mandates:

1. Debit Mandates

When you authorize a bank or non-banking organization to set up eMandate, debit eMandate allows a particular amount to be deducted from the bank account. For example, if you take a personal loan of ₹10000 at 1.5% interest with a repayment tenure of 3 months, your monthly EMI will be ₹3341.67. When you set up eMandate, the debit mandate will allow a successful deduction of ₹3341.67 on the due date till the payment is completed.

2. Credit Mandates

The way debit mandate allows successful debits, credit mandate allows successful credit in your bank account.

e-Emandate Registration Process – How Does It Work?

You’re supposed to complete the e-Mandate registration process just once by authorizing the institution to debit the agreed amount from your bank account. While the basic documents required to set up a mandate are the same, the process can look different, depending on the platform/app. You can alter or cancel your subscription using the same app you used for setting it.

On Zype, you can complete your e-Mandate registration in minutes while completing your loan application. All you have to do is enter your bank account number and IFSC code. After the bank account verification is completed, you can authorize the app to set up auto-debit. And that’s it! Your Personal Loan EMI amount will automatically be deducted from the registered bank account on your payment date.

Read Must: Personal Loan EMI Calculator

What is the Eligibility for the e-Mandate?

To be able to create an e-Mandate subscription, you have to meet a particular eligibility criterion of the institution. And while the eligibility is different for different banking and non-banking organizations, a basic requirement is a legitimate bank account that allows the e-Mandate facilities. Make sure your bank account is linked to your Aadhaar card.

Other than that, you may require your identity card like PAN, Aadhaar card, driver’s license, etc.

Zype’s eligibility criteria for setting e-Mandate after you’re approved for a personal loan is simple! All you need to do is enter your bank account number and IFSC code. After which you can authorize the app to create your subscription.

How To Apply For e-Mandate?

You can simply apply for an e-Mandate following these simple steps:

1. Go To The Service Provider’s Platform:

Whether it’s for a bill payment or a monthly SIP, select the service for which you want to create the e-Mandate subscription. Next, go to the respective app or platform on which to set up an e-Mandate and start your subscription process.

2. Enter Your Mandate Details:

Depending on the app or platform on which you want to set your auto-debit, you can either enter the mandate details like payment amount, due date, frequency, etc or it will automatically appear according to the payment plan.

3. Authorize The Service Provider:

You have to authorize the service provider to deduct the amount from your registered bank account. And to complete the authorization, you will have to enter the required details like your bank account number, IFSC code, etc, depending on the requirement.

4. Confirm The Authorization:

After you have completed the authorization process, wait for confirmation. Once you have received the confirmation, the payment amount will automatically be deducted from your bank account on the due date.

What Are The Advantages Of e-Mandate?

The benefits of e-Mandate are beyond the fact that institutions are able to collect money securely and conveniently from their users.

As a customer, these are some advantages you shouldn’t miss out on:

1. Timely Payments

While it’s human to forget payment dates, creating an e-Mandate subscription eliminates that. The payable amount will automatically get deducted from your bank account on the due date, ensuring that you never miss a payment.

2. Convenience

Setting up a mandate is just a one-time effort. After which, you don’t have to take the burden of remembering the due dates and making any manual payments. This makes all your payments time-saving and hassle-free!

3. Prevents Unnecessary Costs

e-Mandate is a very effective method of avoiding any kind of additional fees or penalty charges for late payments.

4. Secure

Any channel that offers the e-Mandate facility is fully encrypted which makes all your payments 100% secure.

Conclusion:

The entry of the e-Mandate facility has helped convenience join hands with good financial habits.

Because after all, your financial health is made up of your financial habits.
And the small act of setting e-Mandate ensures you stay on top of any kind of payment or investment, improving your credit history and overall wealth, and taking you a step closer to your financial goals.

Read Must: How to Improve/Increase Cibil(Credit) Score Immediately?

Frequently Asked Question

Is There Any Limit for an e-Mandate Through One Account?

It’s important to go through the terms and conditions mentioned on the app/platform to understand the maximum limit and transaction limit associated with your e-Mandate.

How are e-Mandates Different From ECS?

e-Mandates only allow successful debit of recurring payments. On the other hand, an Electronic clearing service allows many other activities like bill payments, clearing checks, making fund transfers, etc.

How much Time is Needed in the e-Mandate Process?

The time needed to complete the set-up of your e-Mandate depends on the platform or app where you’re creating your subscription. On Zype, you can set up auto-debit for all your loan payments within minutes!

What are e-Mandate charges?

While there are some providers who offer e-Mandate without any additional charges, the extra cost of setting the subscription can be different for different service providers.

How to Cancel an e-Mandate?

To cancel or alter your e-Mandate subscription, you can go to the same app or platform where you set it and make your desired changes. If you’re unable to do so, you can go through the terms or contact the service provider.

Is e-Mandate Registration Safe?

Yes, e-Mandate registration is a very safe way of automating your payments. The e-Mandate facility is completely encrypted which makes your payments 100% secure.

What is the Maximum Amount for an e-Mandate?

The maximum amount for an e-Mandate depends on the terms and conditions of the institution.