Home >Money >Personal Finance >How to be free from the hassle of remembering recurring payments

In Greek, the word ‘auto’ means self. When something works on its own, it is called automatic. When you tell your story, it is called an autobiography. There is a certain amount of freedom you get when tasks are set on auto mode. Take for instance, the auto-debit facility offered by banks and other financial institutions. It sets you free from remembering payments every month.

What is auto -debit?

It is a facility given by your bank to help you set your bill payments.

So instead of paying different bills manually, the payment goes through on its own as per your mandate.


You don’t have to write a cheque every month towards your bill. Your dues can be directly debited from your bank account. You can set the frequency as well.

For instance, your home loan EMI can be set for auto-debit every month on a specific date. Or your insurance premium payment could be set for auto debit every six months or even annually. And once set, you can simply forget about keeping track of due dates. The bills will get paid automatically as long as there’s money in your back account.


You can either set it for a fixed amount of your choice or the exact bill amount.

In case of setting auto debits for credit card bills, it could be a fixed amount, the total amount due, or the minimum amount due.

Finer details: When we mentioned auto debit above, we were talking about a generic facility which lets you debit recurring payments like SIPs and EMIs by giving your bank a mandate. But if you take a look at the granular details, you will realise that earlier auto-debit was set via the electronic clearing system (ECS). But banks are now switching to a new system through the National Automatic Clearing House (NACH).

How to set it up

It’s hardly your headache to figure out which system you need to be on. Banks that have already transitioned to the new system will offer you the new system. Irrespective of which system you are on, you will have to fill a form to set up an auto debit. To start an auto debit facility, for say a utility company like your mobile phone bill, you need to fill in the auto-debit mandate with the mobile service provider and get the same endorsed by the bank. The mobile company takes the form to your bank as proof that you have allowed it to withdraw money from your account periodically. Some banks have totally migrated to the new system and now allow you to set an e-mandate using their debit cards or net banking.

Fines: While the facility will give freedom from remembering to make manual payments, it’s important that you take it seriously as an auto debit mandate is just like a cheque issued by you. This means, you need to ensure you have enough funds in the account, so that your auto debit gets cleared. If the payment bounces, you will have to bear the same fines as you would have for a bounced cheque.

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