Investment update: Perpetual SIPs to discontinue starting October 1

But there's an important update for SIP (Systematic Investment Plan) investors related to the National Automated Clearing House (NACH)

The Indian stock market is currently full of excitement as the bulls are winning for the sixth day in a row. The Nifty index is doing exceptionally well, starting the week strongly. It has crossed the important 19,900 point mark, coming close to its all-time high of 19,991.85, set in July this year.

But there's an important update for SIP (Systematic Investment Plan) investors related to the National Automated Clearing House (NACH). According to a recent announcement, NACH mandates will now have a maximum validity period of 30 years.

In simple terms, NACH helps in managing customer requests for regular debits from their bank accounts for investments. In their circular, NACH stated, "We will only accept mandates with a duration of 30 years or less." These mandates allow banks to automatically deduct money for SIP investments in a specific mutual fund. This change is meant to make the system stronger, according to NACH.

Due to this change, investors can't use the 'until canceled' option anymore. Instead, they need to specify an end date for the mandate, which cannot be more than 30 years from the issuance date.

It's important to remember that this change won't affect existing perpetual SIPs or SIPs started before September 30, 2023. The new rules come into effect on October 1, 2023. NACH also clarified that this applies to all types of mandates, whether they are physical or electronic.

Additionally, they are discontinuing the A001 (API Mandate) category code, which didn't serve any specific purpose. From now on, everyone involved should use the relevant category codes for clarity and streamlining the process.

To sum it up, the Indian stock market is doing well, but SIP investors should be aware of the new NACH mandate rules starting on October 1, 2023.