eMandate on Zerodha (UPI and net-banking)

Overview

An eMandate is a digital authorisation given by a bank account holder to a financial services provider, authorising the provider to debit the account for a recurring payment up to a specified limit, on a defined schedule, for a defined purpose. On Zerodha , eMandates are primarily used for Systematic Investment Plan (SIP) contributions through the Coin mutual fund platform, enabling automatic monthly debits from the client’s bank account to fund ongoing mutual fund investments without requiring manual intervention for each instalment.

Two main mechanisms are available for eMandates at Zerodha: the National Automated Clearing House (NACH) eMandate registered via net-banking or debit card, and UPI AutoPay (the UPI-based recurring payment mandate). Both serve the same functional purpose but differ in registration mechanics, processing timelines, and limit structures.

Background and regulatory framework

The eMandate infrastructure in India is administered by the National Payments Corporation of India (NPCI) through two related systems:

• NACH eMandate: The electronic version of the National Automated Clearing House mandate. Registration is completed online through the client’s net-banking portal or via debit card-based authentication. The mandate is then stored in the NACH system and executed on the scheduled debit dates.
• UPI AutoPay: A newer mechanism under the UPI 2.0 framework that allows recurring payment mandates to be set up through any UPI-enabled application. UPI AutoPay mandates are approved by the client through a UPI PIN confirmation on each new mandate setup.

SEBI ’s regulations for mutual fund SIP transactions require that the debit from the client’s bank account is made under a validly registered mandate that the client has explicitly authorised. The eMandate framework provides the audit trail and authorisation record required for regulatory compliance.

NACH eMandate registration on Zerodha

Initial setup

When a client sets up a new SIP on Coin or requests a recurring fund transfer, they are prompted to register a NACH eMandate. The registration process varies slightly by bank but generally involves:

1. Selecting the bank from a list of NACH-participating banks.
2. Being redirected to the bank’s net-banking portal (or entering debit card details, for banks offering debit card mandate registration).
3. Logging into the bank’s net-banking system and authorising the mandate, which specifies the debit limit, frequency (monthly, quarterly, etc.), start date, and end date or “until cancelled” instruction.
4. Receiving a mandate registration confirmation from the bank.

The mandate is registered in the NACH system and becomes active after a processing period, typically 15 to 30 days for NACH mandates. This activation delay means that a SIP set up with a NACH eMandate does not debit on the very first instalment date if the mandate is not yet active; the first debit occurs on the instalment date after the mandate activation.

Debit limits

NACH eMandates specify a maximum debit amount per transaction. For Zerodha Coin SIPs, the client typically sets the mandate limit to the SIP amount or to a higher buffer to accommodate possible future SIP amount increases. The mandate cannot debit more than the specified limit in a single transaction, providing a cap on automatic debits.

Debit dates

The NACH eMandate for a SIP specifies the dates on which debits are permitted. For a monthly SIP, the mandate typically authorises debits on a specific day of each month (e.g., the 5th, 10th, or 15th). If the debit date falls on a bank holiday or a non-business day, the debit is processed on the next working day.

UPI AutoPay registration on Zerodha

UPI AutoPay mandates are set up through the client’s UPI-enabled payment application (such as Google Pay, PhonePe, Paytm, or the BHIM app). The registration process is:

1. The client selects UPI AutoPay as the mandate type in Coin or Kite.
2. A UPI mandate request is generated and sent to the client’s UPI ID (VPA).
3. The client receives a notification in their UPI application and approves the mandate using their UPI PIN.
4. The mandate is registered in the UPI system and becomes active immediately or within one to two business days.

UPI AutoPay mandates are generally faster to activate than NACH mandates, with some mandates becoming active on the same day of registration.

Limits for UPI AutoPay

NPCI has set limits on UPI AutoPay mandates. As of 2024, the standard limit for a single UPI AutoPay mandate is Rs 15,000 per debit. For mandates above this limit, additional authentication (the bank’s OTP or debit card PIN, depending on the bank’s integration) is required at registration. For recurring SIPs above Rs 15,000, the NACH eMandate route is often more practical.

Pre-debit notifications

NPCI’s UPI AutoPay framework requires that clients receive a pre-debit notification at least 24 hours before each recurring debit is processed. This notification gives the client advance notice of the upcoming debit and the opportunity to pause or cancel the mandate if they do not want the debit to proceed. The pre-debit notification is sent by the UPI application through which the mandate was registered.

Managing eMandates on Zerodha

Clients can view and manage their registered eMandates through the Coin platform or through Console . The management interface shows:

• All active mandates and their details (bank, limit, frequency, dates).
• The SIPs or recurring instructions associated with each mandate.
• Options to pause, modify, or cancel individual SIPs.
• The option to deactivate a mandate when all associated SIPs are cancelled.

Cancellation of a mandate is processed through the bank and NACH or NPCI system. The cancellation typically takes effect within one to five business days for NACH mandates and within one to two business days for UPI AutoPay mandates.

Impact of the idle funds policy on mandates

An important interaction exists between Zerodha’s idle funds policy and eMandates. When funds are automatically debited under a SIP mandate and transferred to the Coin platform for mutual fund purchases, the activity resets the idle funds clock – meaning that the trading account is considered active. However, if the mandate debits into the trading account and the funds are not used within the idle period (unusual, since SIP debits are typically for immediate investment), the standard idle funds return mechanism may apply.

Zerodha’s system is designed to process SIP purchases from Coin on the debit date, so the funds are invested into the designated mutual fund scheme on the same day or the next business day, minimising the window during which the funds sit idle.

Failed mandates

A debit under an eMandate can fail if:

• The bank account has insufficient funds.
• The mandate limit has been exceeded.
• The mandate has been cancelled or deactivated.
• There is a technical failure in the NACH or UPI system.

In the event of a failed SIP debit, Zerodha notifies the client and, depending on the SIP configuration and the AMC’s policies, the failed instalment may be skipped or retried. Multiple consecutive failed debits may lead to the SIP being paused or cancelled.

References

• NPCI, “National Automated Clearing House (NACH): operational guidelines,” latest edition.
• NPCI, “UPI AutoPay circular,” 2021.
• SEBI Circular on mutual fund SIP transaction processing requirements.
• Zerodha Coin Help Documentation, “Setting up and managing eMandates,” coin.zerodha.com.
• Zerodha Z-Connect Blog, “UPI AutoPay for SIPs on Coin,” Zerodha.com.
• Reserve Bank of India, “Framework for processing of e-mandates on recurring transactions,” 2019 and 2021 amendments.