NPCI extends ‘LON’ NACH Credit product to all DBT Schemes
NPCI-NACH Division vide its Circular No 16 dt. July 16, 2018 rolled out a new NACH Credit product named LON. The primary goal of LON is to enable destination banks to identify Interest subsidy pay-outs via DBT mode. Department of Higher Education, Government of India offers subsidies to eligible education loans availed from banks. To ensure quick and error-free credits of interest subsidies to eligible education loans, NACH is the chosen mode. NPCI has advised banks to make arrangements to credit the Loan Accounts only, without routing through intermediate accounts. Hence the identifier LON is part of the inward file itself. Basis this identifier, destination banks can design an appropriate process flow at their end. The respective Loan Account Number is part of the transaction file sent by NPCI. This ensures destination bank does not face any challenges to credit the subsidy amounts. In the first phase the LON credits are of “Central...