Getting your first credit card is rewarding but can also be challenging. As someone who’s new to credit, you may not have an ideal credit score or history. This makes financial institutions hesitate when it comes to approving your application.
After all, a strong credit history and score reflect creditworthiness, whereas its absence implies a high risk of non-payment. So, how do you get a credit card with no credit history? Thankfully, today, having no credit history does not mean you can’t get a credit card.
There are several tips you can rely on to get your first card and safely build your creditworthiness. Read on for more.
Tips to get your first Credit Card
Here are some tips you can try to get credit cards for beginners:
Get a supplementary credit card
A supplementary credit card is dispatched when a primary cardholder puts in the request for it. Any primary cardholder can request a supplementary card for their family members and make them authorised users.
With this authorisation, you can use the credit card and share its benefits with the primary cardholder. Generally, supplementary cards are issued without any hassles when the primary cardholder has good creditworthiness.
Another option is getting a secured credit card by putting up your assets, generally, a fixed deposit, as security. This works the same as a secured loan and your credit limit depends on the value of your FD or asset. Issuers offer these cards to individuals who don’t have a credit history and want to build a positive one.
Avail of a card against a savings account
Top banks in India also offer existing customers credit cards against their savings accounts. This way, you leverage your savings account to get your first credit card when you don’t have a credit history. However, this depends on the bank and you must maintain a minimum balance to qualify.
Choose a prepaid credit card
Getting advance cash can be difficult if you don’t have a credit history. Therefore, many financial institutions offer prepaid credit cards. In these types of credit cards, you can preload an amount and make purchases with those funds.
Here are the most important points to keep in mind when getting your first credit card.
Know the types of credit cards available
Evaluate different cards, such as cashback, travel, co-branded, secured or prepaid credit cards to choose one based on your needs. Doing this ensures that you can make the most of your card, enjoying perks and saving more.
Know how grace period works
This is the duration between your purchases and the due date for your credit card bill. It generally goes up to 45 days and the issuer does not charge any interest during this period.
Opt for a lower card limit
Starting with a lower credit limit minimises your risk of overspending and ensures that you can pay the bill on time. It also helps you learn how to use a credit card the first time and manage repayment on time. This will help you build a good credit score and get affordable loans in the future.
Check the fees and charges
Being aware of the interest rates and other charges associated with the credit card is important. Credit cards come with various fees and charges like annual fees, joining fees, cash advance fees, balance transfer fees, etc.
With this information, you can choose the right terms for your first credit card and get the maximum benefits. This is important to avoid any unnecessary financial burden.
In addition to the above, you must also ensure that you choose the most secure card and take the right measures for added safety. Doing this will help protect your finances from fraud. For all these features and benefits, you can rely on the Fibe Axis Bank Credit Card.
As India’s first numberless credit card, this card enables you to add another level of security to your finances. Moreover, it gives you several benefits, such as up to 3% cashback on your spending, zero annual and joining fees and seamless UPI transactions. Download the Fibe App or register on our website to apply for it now!
FAQs on Getting Your First Credit Card
How can a person get a credit card for the first time?
To choose from the best credit cards for beginners, research and compare the available options. Then, check the eligibility criteria set by the institution and apply if you meet the requirements.
Is it easy to get the first credit card?
Getting a credit card without any credit history can be difficult since issuers need a good CIBIL score of 750 or above. However, you can get a secured credit card or an add-on credit card with ease.
How to get the first credit card with no history?
You can apply for an add-on credit card if you don’t have a credit history. You can also get a credit card against your FD or savings account, depending on the issuer.
Can I get a credit card without a salary?
Yes, you can get a secured credit card against your fixed deposit account. You can also apply for an add-on credit card if a family member is the primary cardholder.
Can I get a credit card on my first salary?
This depends on the issuers, as generally, they require salary statements of 3 months or so to evaluate your creditworthiness. You can check these details on your preferred issuer’s official website.
Travelling with a credit card can be a great move as it allows you to pay safely and enjoy a range of cost-saving benefits. These include racking up rewards points on all transactions, redeeming them for flight tickets and hotel bookings, enjoying discounts at dining/retail partners and more.
By using your credit card efficiently and optimally, you can make the most of these benefits and perks. So, read on to learn what is a travel card, tips on how to use it while travelling, and more.
What are travel Credit Cards and how do they work?
Travel credit cards have specific benefits for people who travel frequently. These cards allow you to earn rewards, which you can redeem for a variety of products and services and enjoy exclusive discounts on travel-related expenses too.
For instance, you can redeem points as air miles to book flight tickets. Furthermore, you can enjoy discounts on hotel stays, cab bookings and more. In addition to that, travelling with a credit card enables you to enjoy the following benefits:
Makes every transaction rewarding with accelerated reward points
Helps you enjoy exclusive benefits when you stay or fly with partners
Keeps the forex costs low with lower forex fees
Ensures added security with complimentary or affordable travel insurance plans
Lowers risk of theft by eliminating the need to carry substantial cash while travelling
Travel credit cards offer umpteen benefits but you cannot enjoy them to the fullest if you don’t know how to use the card. So, remember these tips when you plan on travelling with a credit card:
Inform the issuer about your travel, especially when going abroad, to avoid fraud alerts or payments being declined
Check your travel benefits and how to redeem them beforehand
Keep a tab on your spending as you will need to repay your bill in the next cycle
Evaluate partner benefits and make necessary arrangements to redeem them
Get the required insurance to keep yourself and your finances protected
Use RFID wallets to add another layer of security
Monitor your ATM transactions to keep the associated costs manageable
Research which cards are widely accepted to ensure seamless access to funds
How to choose the right Credit Card for travelling?
When selecting a travel credit card, you must compare the top options based on your travel needs and finances. Here are some points to remember when selecting a credit card for travelling:
Choose a credit card that offers maximum reward points for international transactions, if flying overseas
Opt for a card that offers maximum number of complementary visits to domestic and international lounges
Select a card that offers travel insurance
Consider a co-branded travel card for specific partner benefits
Look out for sign-up and welcome bonuses
Compare the annual fees, interest rates, ATM fees and other charges
Check your eligibility before applying
Keeping these tips in mind, you can easily get the best credit card for travelling and enjoy your trips. Ensure that you use the right security measures while travelling with a credit card.
One way to do that is by choosing secure credit cards like the Fibe Axis Bank Credit Card. This is India’s first numberless credit card, which helps keep your card details safe and is linked to your UPI ID. You can also earn up to 3% cashback on your transactions.
This credit card also comes with four complementary visits to domestic airport lounges in a year, enabling you to travel comfortably. Download the Fibe App or register on our website to apply for it now!
FAQs on Travelling on Credit Card
Is it good to use a credit card when travelling?
Yes, most issuers offer exclusive rewards and benefits to travel credit cardholders. It can also be safer than using cash, as you can block your card in case of loss or theft.
Who can get a travel credit card?
Here are a few general eligibility criteria for travel credit cards:
You must be an Indian citizen
You must be between 21 and 65 years
You must be salaried employee with minimum in-hand salary of ₹15,000 in non-metro cities and ₹18,000 in metro cities
You must have a good credit score
Can you use a credit card to pay for travel expenses?
Yes, you can pay for all your travel-related expenses, such as:
Booking flight tickets
Booking your stay
Dining
Entertainment
Can I book flight tickets with a credit card?
Absolutely! You can use a credit card for flight bookings. You can also use your air miles to get discounts.
Which is better, a travel credit card or debit card?
A credit card gives you better financial freedom than a debit card. This is because your credit card has a pre-determined limit, which isn’t linked to your bank account, like a debit card. Moreover, if you’re making payments abroad, a credit card becomes a better option as it has a low forex mark-up fee.
Want to make the most of seasonal offers on electronics, gadgets and electronics? Well, by using credit cards, you can avoid making lump sum payments and convert your bill into affordable EMIs. Simply put, buying products on EMI gives you the benefit of buying now and paying in instalments.
This way, you can buy big-ticket items such as smart televisions, washing machines, refrigerators, air conditioners and more without depleting your savings. By learning how to make purchases on EMI using your credit card, you can enhance your shopping experience.
Read on to learn how to buy electronics on EMI with a credit card, the type of EMI options you can get and more.
How do Credit Card EMIs work?
The credit card EMI facility is very easy to use. For instance, if you want to buy electronics on EMI using your credit card, you can choose the EMI option at the time of payment. However, this is also available for eligible products. You will also have to choose a suitable tenure for your EMIs.
However, note that the issuer may levy an interest for the same. The interest rate depends on your card, issuer and bill amount. To calculate the EMI, your entire transaction amount plus the interest amount will be considered. Then, the total will be divided into equal instalments spread throughout your chosen tenure.
Remember that in some cases, the products you choose to buy on credit card EMIs may be eligible for no-cost EMIs. Here, the issuer will not charge any interest and only the transaction amount will be divided into equal instalments.
For instance, let’s assume you buy ₹50,000 worth of electronics on EMI and can choose the no-cost EMI option. Now, the amount will be divided as per a tenure of your choice. If you choose 10 months, the EMI may be ₹5,000. Generally, choosing the no-cost EMI option is beneficial as there are no additional costs above your bill amount.
With the credit card EMI facility, you can grab exciting offers on electronics and other products without any hassles! Opting for the EMI option is as simple as paying with your credit card. Here are the steps to buy products on EMI with credit cards:
Choose a product of your choice
Check if the product and your card are eligible for EMI payments
Proceed to payment and choose the EMI option
Make a down payment, if needed, and choose a suitable tenure
Authorise the transaction to complete the payment
Upon successful authorisation, your transaction will be complete. You can check the EMI plan and other details by logging into your credit card account via net banking or using the issuer’s mobile app.
Alternatively, you can also convert your entire credit card bill into EMIs. This way, you can pay your entire credit card bill with easy monthly instalments and repay on time. You can do this by contacting the issuer’s customer support team or through your credit card account.
Factors to consider when shopping on EMI with a Credit Card
While there are many benefits of the EMI option, here are some points you must keep in mind.
Before buying the products using the credit card EMI option, make sure that your issuer provides an EMI facility on your card.
Often, issuers charge a small processing fee to convert your purchases into instalments. Knowing these charges is important as they add to your overall costs.
Keep in mind that shopping for any products on EMI will reduce your credit limit for the entire transaction amount and not just the EMI amount.
Check the interest rate offered by your issuer for the EMI option.
Choose the tenure wisely and opt for prepayment to save on interest.
Considering these factors, you can decide if shopping for electronics on EMI suits you. To enjoy other money-saving benefits, get the Fibe Axis Bank Credit Card. With it, you can get up to 3% cashback on transactions, making every payment more rewarding.
A significant benefit of this card is that you can link it with your UPI ID for convenient and safe payments. Moreover, it has zero joining and annual fees. To apply for this credit card, download the Fibe Instant Loan App or register on our website.
FAQs on Buying electronics on EMI using a Credit Card
How can I get an EMI facility for electronics shopping?
With a credit card EMI option, you can easily convert all your gadget shopping bills into affordable instalments spread across a comfortable tenure.
Can I buy electronic appliances on EMI with a credit card?
Yes, you can convert the cost of electronic appliances into EMIs at the time of purchase. You can also convert your credit card bill into EMIs. Both can attract interest, so make sure you choose a cost-effective option.
Amortised loans are one of the many repayment options offered by lenders. When you opt for a loan, one of the most important factors to consider is the EMI. It includes a portion of your interest and principal, which you need to repay on a fixed date every month.
Any form of credit, where your EMI amount stays fixed for the entire tenure, is known as an amortised loan. Here, lenders create a fixed repayment schedule with equal repayments.
Read on to know what is an amortised loan, its working process, how it differs from other options and more.
What is an Amortised Loan?
An amortised loan, meaning a loan with a repayment structure where the monthly repayment amount includes both interest and principal components, is quite common.
Here, you initially pay off the interest expenses. After this, you repay the principal amount by the end of the tenure, which makes the outstanding loan amount zero.
Personal loans, education loans and auto loans are a few examples of amortised loans. However, credit cards and mortgage loans are unamortised loans.
To understand the meaning of an amortised loan better, you need to know how it works. Firstly, the lender creates an amortisation schedule using principal, tenure, interest rates and other loan details.
This helps the borrower visualise how their EMIs get distributed across the tenure when they pay their dues. Simply put, the interest amortisation of a loan will help you calculate the monthly EMI with ease.
This type of loan repayment plan aims to clear most of the interest component initially. So, the interest amount makes up most of the EMI with the principal component low. As time passes, the principal component of an amortized loan increases. This way, both these loan components share an inverse relationship across the loan tenure.
How do Amortised Loans Differ from Other Credit Options?
In contrast to amortised payment plans, there are two other credit repayment options.
Balloon Loans
These are short-term loans, where only a portion of the principal loan amount is paid through EMIs, while the outstanding amount is paid in entirety at the end of tenure.
Revolving Loans
A credit card is a type of revolving debt where the borrower can use the credit within the sanctioned limit and pay the amount back without interest or with interest based on due dates. However, there is no fixed EMI amount and the borrower can withdraw more credit (within the limit) as and when required.
How to Calculate an Amortisation Schedule?
Here are the steps to calculate the amortisation of a loan:
Step 1: Collect all the details, such as principal amount, tenure and interest rate
Step 2: Calculate the EMI amount and monthly interest rate
Step 3: Calculate the interest on the principal for the first EMI using the monthly interest rate
Step 4: Calculate the second month’s interest using the outstanding principal from the first month
Step 5: Follow the trend to create an amortisation schedule
Calculating such loan terms manually can be a tedious and time-consuming task. Therefore, using an online amortisation calculator is a better option.
What are the Benefits of Amortisation?
Here are a few of the pros of this kind of loan and repayment structure:
Reduces the risk exposure of the lender
Helps the borrower manage EMIs with a fixed repayment schedule
Enables the borrower to visualise the loan terms and compare the best loan offer
Keeping these facts in mind, you can opt for an amortised loan over other repayment plans to avoid the burden of paying in a lump sum. If you need an easy financing solution, taking a Fibe Instant Personal Loan is a wise option. With Fibe, you can get a loan of up to ₹5 lakhs without much hassle. Download our Personal Loan App or register on our website to apply now.
FAQs on Amortised Loan
What are the types of amortised loans?
Amortised loans follow a certain payment structure and may include education loans, car loans, personal loans, etc.
What is amortised vs fixed loan?
An amortised loan requires payment in regular monthly EMIs, where the first few payments are directed towards paying the interest charges. The amount you pay towards the interest component decreases as you make each payment in an amortised loan. In a fixed loan, your interest rate, thus, your interest amount, remains fixed throughout the loan tenure.
What does 5% amortisation mean?
Amortisation refers to the spread of capital expenses over a fixed period. In a loan, 5% amortisation refers to 5% p.a. interest on the principal loan amount.
How is amortisation calculated?
For all loans, interest amortisation calculation can be done using this formula:
Net Prepayments Amount = Principal × [(1+i) n−1i×(1+i) n].
Here, i is the interest rate charges and n is the tenure. You can also use online amortisation calculators for quick and easy calculations.
Loan underwriting is an important part of the loan approval process. It helps lenders understand a borrower’s creditworthiness, repayment capacity and overall risk profile before deciding whether to approve a loan. The assessment can also influence the eligible loan amount, interest rate, tenure and other terms offered to the applicant.
Lenders typically review financial documents, credit history, income, employment details and existing debt. For secured loans, they may also assess the value and condition of the collateral. Today, many lenders use automated systems to speed up parts of the underwriting process, while complex cases may still require manual review.
What is Loan Underwriting? (Meaning & Definition)
Loan underwriting is the process through which a lender evaluates a borrower’s financial profile and the risk involved in granting a loan. The lender uses this assessment to decide whether the applicant is likely to repay the loan on time and whether the application should be approved, rejected or approved with specific terms.
Before approving a personal, home or business loan, lenders typically assess factors such as income stability, credit history, existing financial obligations and repayment behaviour. For secured loans, the value and quality of the pledged asset are also considered. This helps the lender match the loan amount and terms to the level of risk involved.
Loan Underwriting Process: Step-by-Step
Although the exact process may vary by lender and loan type, loan underwriting generally includes the following stages:
Step 1: Application Review
The lender reviews the loan application to check whether the basic information is complete. This may include the requested loan amount, purpose, personal or business details and employment information.
Step 2: Document Verification
The lender verifies the documents submitted with the application. Common checks include identity and address proofs, salary slips, bank statements, income tax returns or business financial records, depending on the loan type.
Step 3: Credit History Assessment
The lender reviews the applicant’s credit report and repayment history to understand past borrowing behaviour, outstanding debt and any delayed payments or defaults.
Step 4: Income and Repayment Capacity Check
Income, cash flow, employment stability and existing EMIs are assessed to determine whether the borrower can comfortably manage the proposed repayment obligation.
Step 5: Collateral Assessment, if Applicable
For secured loans, the lender may evaluate the market value, quality and condition of the asset offered as collateral. This can include property, gold, a vehicle or another eligible asset.
Step 6: Risk Assessment and Credit Appraisal
Based on the information collected, the lender assesses the overall lending risk and determines the amount, interest rate, tenure and other terms for which the applicant may qualify.
Step 7: Decision and Disbursal
The lender may approve the application, reject it or ask for additional information. Once the loan is sanctioned and the required formalities are completed, the approved amount is disbursed according to the lender’s process.
Different Types of Loan Underwriting Processes
Loan underwriting can be carried out in different ways depending on the lender, loan size and complexity of the application.
Manual Underwriting
Manual underwriting involves a loan officer or underwriter personally reviewing the applicant’s documents and financial profile. It is often used for complex or high-value applications, cases that need additional judgement, or applicants whose profiles cannot be assessed adequately through automated rules alone.
A lender may also choose manual review for a first-time borrower with limited credit history or when additional clarification is required.
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Automated Underwriting
Automated underwriting uses software, algorithms and data-driven rules to evaluate a loan application. Depending on the lender, these systems may use technologies such as machine learning and artificial intelligence to analyse information quickly and consistently.
The system may assess factors such as income, employment, credit history, existing debt and repayment capacity. Automated underwriting can help lenders provide faster preliminary decisions, particularly for standardised lending products.
Hybrid Underwriting
Hybrid underwriting combines automated assessment with human review. An automated system may first screen the application and evaluate standard eligibility and risk parameters, while an underwriter reviews exceptions, complex profiles or cases that require additional judgement before a final decision is made.
Rules and Standard Requirements for the Loan Underwriting Process
Once you understand the loan underwriting meaning, it is useful to know the main factors lenders generally assess during the process.
Income and Employment
Lenders review your income and employment to understand your financial stability and repayment capacity. They may request salary slips, bank statements, income tax returns or other income documents depending on your employment type and the loan product.
They may also review your designation, employer, work experience and continuity of employment. A stable income and consistent employment history can strengthen the lender’s confidence in your ability to repay the loan.
Credit History
Your credit history reflects how you have managed loans and other credit in the past. Lenders may review your credit report, credit score, active accounts, outstanding dues, repayment history, utilisation and any past defaults or settlements.
A consistent repayment record can support your application, while missed payments or high existing debt may increase the perceived lending risk.
Debt-to-Income Ratio
Lenders assess how much of your income is already committed towards existing loans and other debt obligations. A high debt-to-income ratio may indicate that a large share of your monthly income is already being used for repayments, which can reduce your capacity to take on an additional EMI.
Investment Paperwork
If investments are being considered as part of your financial profile or are offered as security for a secured loan, the lender may ask for relevant statements or certificates. These documents can help verify ownership, value, maturity and other applicable details.
Condition of Collateral
For a secured loan, the lender evaluates the asset offered as collateral because it may be used to recover dues if the borrower defaults. The assessment depends on the type of asset.
For example, in a property-backed loan, lenders may consider the property’s location, market value, age and condition. For gold-backed lending, factors such as purity, weight and prevailing market value may be reviewed.
Credit Appraisal
After reviewing the applicant’s financial and credit profile, the lender carries out a credit appraisal to determine whether the loan can be sanctioned and on what terms. A strong repayment history, stable income, manageable existing debt and suitable collateral, where applicable, may support eligibility for favourable terms.
Employment Type & Loan Tenure
Employment type can affect how a lender evaluates income stability. Salaried applicants and self-employed applicants may be assessed using different documents and risk parameters because their income patterns can differ.
The requested loan tenure also forms part of the risk assessment. A longer tenure may reduce the monthly EMI but keeps the loan outstanding for a longer period, while a shorter tenure can increase the monthly repayment burden. Lenders consider the applicant’s age, income, obligations and repayment capacity when deciding an appropriate tenure.
Loan underwriting helps lenders manage the risk of non-repayment while ensuring that the loan offered is suitable for the borrower’s financial profile. The time required can vary from a few hours for highly automated cases to several days or longer for complex applications, depending on the loan type, lender process and completeness of documents. Providing accurate information and complete documentation can help avoid unnecessary delays.
For convenient access to funds, you can explore Fibe Instant Personal Loans of up to ₹10 lakh, subject to eligibility and lender assessment. Fibe offers a digital application process with minimal documentation. You can apply through the Fibe app or website.
Personal Loan Underwriting Process: What’s Different
Personal loans are generally unsecured, which means the lender usually does not have an asset such as property or gold to rely on as collateral. As a result, personal loan underwriting focuses more strongly on the borrower’s creditworthiness and ability to repay from regular income.
During personal loan underwriting, lenders commonly evaluate:
Credit score and repayment history
Monthly or annual income and income consistency
Employment type and job stability
Existing loans, credit-card dues and other monthly obligations
Debt-to-income or similar repayment-capacity measures
Bank-account activity and supporting income documents
Loan amount and tenure requested
Because personal loans are often standardised and digitally processed, automated underwriting can make the assessment quicker. However, an application may still be referred for manual review if the lender needs additional documents, finds inconsistencies or considers the profile outside its standard rules.
FAQs On Loan Underwriting
1.What is loan underwriting?
Loan underwriting is the process used by financial institutions to assess a borrower’s creditworthiness, financial stability and repayment capacity before approving a loan. It helps the lender estimate the risk of default and decide suitable loan terms.
2.What documents are required for loan underwriting?
The documents required vary by lender and loan type. Common requirements include identity and address proof, salary slips or other income proof, bank statements, income tax returns where applicable, employment or business details and documents relating to collateral for secured loans. A lender may request additional documents based on the applicant’s profile.
3.How long does loan underwriting take?
The underwriting timeline depends on the loan type, lender, complexity of the application and whether the review is automated or manual. Some automated personal-loan assessments can be completed quickly, while complex home, business or secured-loan cases may take several days or longer. Complete and accurate documentation can help reduce delays.
Running a business often involves a gap between when expenses need to be paid and when revenue is received. Salaries, supplier payments, rent, utilities and inventory purchases may all be due even when customer payments are still pending.
A Working Capital Demand Loan (WCDL) can help businesses manage such temporary cash flow requirements. It is a short-term working capital financing facility designed primarily to meet immediate operational needs rather than long-term capital expenditure.
Businesses may use a WCDL for eligible working capital requirements such as:
Managing temporary cash flow gaps
Purchasing raw materials or inventory
Meeting payroll expenses
Paying suppliers and other accounts payable
Handling seasonal increases in business activity
Meeting eligible day-to-day operating expenses
The exact purpose, amount, interest rate, security requirements and repayment terms depend on the lender’s credit assessment and sanction terms.
What is a Working Capital Demand Loan?
The WCDL full form is Working Capital Demand Loan.
A Working Capital Demand Loan is a short-term business financing facility used to meet working capital requirements. It can help a business cover temporary gaps between its cash inflows and operating expenses.
A WCDL may be sanctioned as a separate working capital facility or as a sub-limit within the borrower’s overall working capital limit. For example, Federal Bank states that its WCDL is provided within assessed working capital limits and may be available as a sub-limit of the funded working capital facility.
Unlike a loan intended to purchase long-term assets such as property or machinery, a WCDL is primarily designed for short-term operational requirements.
Kotak Mahindra Bank similarly describes WCDL as a short-term working capital facility meant to address immediate funding requirements.
How Does a Working Capital Demand Loan Work?
A WCDL generally works through the following process:
Assessment of working capital requirement
The lender evaluates the business’s financial position, turnover, cash flows, existing debt and working capital requirement.
Loan sanction
Based on its assessment, the lender sanctions an eligible WCDL amount. In some cases, the facility may form part of an already assessed working capital limit.
Disbursal of funds
Once the required conditions and documentation are completed, the approved amount is disbursed according to the terms of the facility.
Interest payment
Interest is generally charged on the outstanding WCDL amount at the applicable rate. The interest rate depends on factors such as the borrower’s credit profile, lender’s benchmark, facility size, tenure and risk assessment.
Repayment
The borrower repays the loan according to the agreed repayment schedule or terms specified in the sanction letter.
Closure or renewal
At maturity, the borrower generally repays the outstanding amount. If additional working capital funding is required, the lender may review the borrower’s financial position and decide whether to renew or extend the facility.
A WCDL is normally a short-term facility. Tenures of up to 12 months are common for such facilities, although the actual tenure varies by lender and borrower. For example, Federal Bank currently specifies a WCDL tenure of up to 12 months for its corporate product.
Features and Benefits of a Working Capital Demand Loan
A WCDL can provide businesses with short-term liquidity while allowing them to manage temporary gaps in their operating cycle.
Quick Access to Working Capital
Once approved, a WCDL can provide a business with access to funds for immediate operational requirements.
This can be particularly useful when a business needs funds for:
Seasonal inventory
Supplier payments
Payroll
Temporary cash flow shortages
Other approved working capital requirements
The actual processing and disbursal time depends on the lender, documentation and credit assessment.
Competitive Interest Rates
WCDLs may carry competitive business lending rates depending on the borrower’s financial profile, creditworthiness, loan amount, tenure and relationship with the lender.
Kotak, for example, describes its WCDL as a cost-effective working capital facility with attractive interest rates.
It is important, however, to distinguish a WCDL from a cash credit or overdraft facility. A WCDL is generally a specific loan amount that is disbursed and becomes outstanding. Therefore, borrowers should check the lender’s sanction terms rather than assume that interest will always be charged only on a portion of the sanctioned limit.
Flexible Repayment Structure
Lenders may offer repayment structures based on the nature of the facility and the borrower’s cash flows.
Kotak describes its WCDL as having a flexible repayment structure.
The repayment schedule may differ across lenders and may involve repayment at maturity, periodic instalments or another agreed arrangement.
Prepayment or foreclosure terms also vary. Businesses should check whether any prepayment charges, notice requirements or other conditions apply instead of assuming that every WCDL can be foreclosed without charges.
Short-Term Tenure
A WCDL is designed primarily for short-term working capital requirements rather than long-term investment.
While tenure varies across lenders, WCDLs may commonly be offered for periods of up to 12 months. Federal Bank, for instance, currently specifies a maximum period of 12 months for its WCDL product.
This makes the facility more suitable for temporary liquidity requirements than for financing long-term assets or projects.
Possibility of Renewal
A WCDL may be renewed or extended if the business continues to require working capital funding.
However, renewal is not automatic.
The lender may reassess factors such as:
Current financial performance
Cash flows
Repayment record
Credit rating
Existing liabilities
Working capital requirement
Account conduct
The amount, interest rate, tenure and security requirements may therefore change when the facility is renewed.
Funding Based on Business Requirements
A WCDL can be structured according to the business’s assessed working capital requirement.
The loan amount generally depends on the lender’s assessment of the borrower’s financial position, operating cycle and repayment capacity rather than being a fixed amount available to every business.
Security Requirements Depend on the Lender
A WCDL should not automatically be considered an unsecured or collateral-free loan.
Depending on the lender and the borrower’s profile, security may include:
Hypothecation of current assets
Charge over receivables or inventory
Fixed assets
Bank deposits or other tangible collateral
Personal or corporate guarantees
For example, Federal Bank’s current WCDL terms specify hypothecation over underlying current assets as primary security and may additionally require a charge over fixed assets, machinery, immovable property, deposits or guarantees.
Therefore, businesses should check the lender’s security requirements before applying.
Also Read: Different Types of Loans That You Should Know
Eligibility Criteria for a Working Capital Demand Loan
There is no single eligibility standard applicable to every WCDL because banks and financial institutions set their own credit policies.
Eligibility may depend on factors such as:
Type of business: Proprietorships, partnerships, LLPs, companies and other eligible business entities may qualify depending on the lender.
Business vintage: The lender may require the business to have operated for a minimum period.
Turnover and financial performance: Sufficient revenue and operating cash flow may be required to demonstrate repayment capacity.
Credit profile: The business and its promoters or guarantors may need to have a satisfactory credit history.
Working capital requirement: The borrower must generally demonstrate a genuine short-term business funding requirement.
Existing banking relationship: Account conduct and existing credit exposure may form part of the assessment.
Financial statements: Profitability, balance sheet strength, receivables, inventory and liabilities may be reviewed.
Credit rating: Larger corporate borrowers may be required to maintain an acceptable external or internal credit rating.
Security: Depending on the facility, lenders may require current assets, collateral or guarantees.
Eligibility requirements can vary significantly between lenders and customer segments. For example, Federal Bank’s corporate WCDL offering currently targets larger corporates and specifies its own turnover and credit-rating criteria.
Therefore, businesses should check the specific lender’s eligibility conditions rather than treating these as universal requirements.
Documents Required for a Working Capital Demand Loan
The documents required for a WCDL depend on the business structure, loan amount, lender and security offered.
Commonly requested documents can include:
Completed WCDL or working capital loan application form
KYC documents of the borrower, promoters and guarantors
PAN and other business identity documents
Partnership deed, LLP agreement or company incorporation documents, as applicable
Latest list of directors and shareholding details for companies
Net worth statements of promoters or guarantors, where required
Udyam Registration Certificate, if applicable
Documents relating to collateral or security, where applicable
For example, Kotak’s current WCDL document list includes KYC, business constitution documents, financial statements, ITRs, GST sales returns, bank statements, debtor ageing, creditor/debtor ledgers and Udyam registration, among other documents.
The lender may request additional documents depending on the applicant’s profile.
Working Capital Demand Loan vs Cash Credit
Although both facilities help businesses finance working capital, they operate differently.
Parameter
Working Capital Demand Loan (WCDL)
Cash Credit (CC)
Structure
A specific short-term loan amount is sanctioned and disbursed
A revolving working capital limit is sanctioned
Purpose
Temporary or specific short-term working capital requirement
Ongoing day-to-day working capital requirements
Withdrawal
Normally disbursed as a loan according to sanction terms
Borrower can draw and repay within the available drawing power
Interest
Generally charged on the outstanding loan amount
Generally charged based on the amount actually utilised
Tenure
Usually short-term; may be up to 12 months depending on lender
Commonly sanctioned/reviewed periodically, often annually
Repayment
According to the agreed maturity or repayment terms
Funds can generally be deposited and withdrawn within the sanctioned facility
The right option depends on whether a business needs a defined amount for a temporary requirement or a revolving facility for recurring working capital needs.
Working Capital Demand Loan vs Overdraft
A WCDL and overdraft can both help manage temporary liquidity needs, but their structures differ.
An overdraft facility generally allows a business to withdraw funds beyond its available account balance up to an approved limit. The borrower can typically use, repay and redraw funds within that limit, subject to the terms of the facility.
A WCDL, on the other hand, is normally disbursed as a specific short-term loan amount for an approved working capital requirement.
As a result, an overdraft tends to provide a more revolving form of access to liquidity, while a WCDL is generally structured as a defined borrowing for a specified period.
Is a Working Capital Demand Loan Right for Your Business?
A Working Capital Demand Loan can help businesses manage temporary mismatches between operational expenses and cash inflows.
It can be useful when a business needs funding for short-term purposes such as inventory purchases, supplier payments, payroll or seasonal increases in demand.
However, businesses should compare:
Interest rates
Repayment terms
Loan tenure
Processing and other charges
Security requirements
Prepayment conditions
Cash credit and overdraft alternatives
before selecting a facility.
A WCDL is debt financing, so it generally does not dilute the ownership or equity stake of existing shareholders or promoters. However, borrowing increases the company’s liabilities and interest obligations, so businesses should assess their repayment capacity carefully.
The funds should also be used according to the purpose and conditions stated in the lender’s sanction terms rather than assuming there are no restrictions on end use.
For individuals looking to finance personal rather than business expenses, a personal loan is another type of financing option.
Fibe offers Personal Loans of up to ₹10 lakh, subject to eligibility, with repayment tenure ranging from 6 to 36 months. The application and KYC journey is digital, and Fibe currently lists nil foreclosure charges on its Personal Loan product.
Visit the Fibe website or download the Fibe app to check your eligibility and available loan offer.
FAQs on Working Capital Demand Loan
1.What is a WCDL in working capital?
WCDL stands for Working Capital Demand Loan. It is a short-term financing facility used by businesses to meet temporary working capital requirements such as raw material purchases, supplier payments, payroll and other eligible operating expenses.
It may be sanctioned independently or as a sub-limit of a borrower’s assessed working capital facility, depending on the lender.
2.What are the features of WCDL?
Some common features of a Working Capital Demand Loan include:
Short-term financing
Funding for working capital requirements
Defined loan amount
Flexible repayment structures depending on the lender
Competitive interest rates based on the borrower’s profile
Tenure that may extend up to 12 months
Possibility of renewal subject to lender reassessment
Security, repayment terms, prepayment charges and other conditions vary between lenders.
3.Why is WCDL required?
A WCDL can help businesses manage temporary gaps between cash inflows and operating expenses.
Businesses may use it for approved requirements such as:
Buying raw materials
Maintaining inventory
Paying salaries
Paying suppliers
Managing receivables-related cash flow gaps
Meeting seasonal increases in working capital requirements
It can therefore provide additional liquidity without requiring the business to raise equity for every short-term funding need.
4.Is WCDL a term loan?
A WCDL is better understood as a short-term demand loan for working capital requirements rather than a conventional long-term term loan.
It is generally sanctioned for a defined amount and period and may have repayment or maturity conditions specified by the lender. Unlike long-term term loans, which are commonly used for fixed assets or expansion projects, a WCDL primarily finances short-term operational requirements.
5.What is the main difference between a Working Capital Demand Loan (WCDL) and Cash Credit?
The main difference lies in how the funds are made available.
Under a WCDL, a specific loan amount is generally disbursed for a defined short-term requirement, with interest payable on the outstanding loan according to the agreed terms.
Under Cash Credit, the bank provides a revolving borrowing limit. The business can generally withdraw and repay funds within its drawing power, with interest typically calculated on the amount actually utilised.
Cash Credit may therefore be more suitable for recurring working capital needs, while WCDL may suit a defined or temporary funding requirement.
6.Is a WCDL the same as an overdraft facility?
No. Although both can be used to manage working capital requirements, their structures are different.
An overdraft generally allows a business to withdraw funds from an account up to a sanctioned limit and repay and redraw funds as needed.
A WCDL is typically disbursed as a defined short-term loan amount with a specified tenure or repayment arrangement.
Which option is more suitable depends on the business’s cash flow pattern, funding requirement, cost of borrowing and lender’s terms.
Credit derivatives are a type of financial contract that helps parties minimise their credit risk. Two parties hold these negotiable bilateral contracts privately and trade them over the counter.
In credit derivatives, creditors can transfer the credit risk of a debtor to a third party. In exchange for taking the credit risk, the third party receives a premium. The value of these derivatives relies on the value of the underlying asset.
Read on to learn more about the types of credit derivatives, their benefits and more.
Types of Credit Derivatives
Check out the various types of these contracts.
Unfunded Credit Derivatives
These do not involve fund transfers from one party to another. These types of contracts rely on a promise of payment only when the borrower defaults. Here are further classifications of these funds:
Credit Default Swap (CDS)
Under a CDS, the derivative buyer pays a premium regularly or swaps the spread to the seller. The seller, in exchange, makes the payment as per the specific conditions of the credit derivative in case the underlying borrower defaults.
Credit Swap Options
These are a financial derivative that provides holders with the right, without obligation, to enter into a contract at a specific strike price on a future date. In simple terms, holders have the ability to transfer their credit risk to another party in exchange for a fee.
Total Rate of Return Swap (TRRS)
This instrument allows the exchange of total returns of securities between two parties.In this type of derivative, one party agrees to pay the total returns to the other party. The other party, in exchange, agrees to pay a predetermined fixed or floating interest rate.
The total return includes the price change of the security or portfolio along with the income generated by it.
These are financial contracts that use collateral or other funding mechanisms to transfer credit risks from one party to another. Here are the other types within this classification:
Credit-Linked Note (CLN)
This is a derivative in which the holder receives a part or full repayment of the face value of the bond in case the borrower defaults. On the other hand, if the borrower does not default, the note is redeemed on maturity at par.
The former stores the funds used for purchasing it in a collateral account. This serves as security against the underlying borrower’s credit risk.
Collateralised Loan Obligation (CLO)
This security pools a group of loans and sells their tranches to investors. Asset managers store the funds used to purchase the security in a collateral account. In case the underlying borrower defaults, these funds help repay investors.
Constant Proportion Debt Obligation (CPDO)
It is a financial instrument structured as a debt security, which relies on the performance of an underlying benchmark. These benchmarks include a basket of bonds or a stock market index.
Compared to traditional investments in bonds or equities, these derivatives offer higher returns and lower volatility.
Now that you know the credit derivative meaning and the various types of contracts, check out the associated benefits.
Risk Management
A significant benefit of these financial instruments is that they help manage risk by providing a mechanism to transfer risk. This, in turn, protects participants from exposure to defaults and helps avoid potential losses.
Portfolio Diversification
These instruments also provide investors with a medium to diversify their portfolios. They do so by allowing them to gain exposure to various types of credit assets and manage risk across a wide range of entities and sectors.
Higher Liquidity
Another benefit is that they help enhance market liquidity by offering a mechanism for participants to transfer their credit risk to another party.
Greater Returns
These instruments offer market participants an opportunity to get good returns as well. They help investors invest in assets that have a higher credit risk and offer higher gains. Also, they improve the pricing of assets, which helps in efficient capital allocation.
Now that you know what is a credit derivative, use it smartly to reduce your credit risk. By eliminating it, you can diversify your investment portfolio effectively and benefit from enhanced liquidity.
Another option to bridge monetary gaps is to opt for the Fibe Instant Personal Loans of up to ₹5 lakhs. Apart from a quick sanction, you benefit from minimal paperwork and a simple application process. To start the journey, download the Fibe Personal Loan App or register on the website.
FAQs on Credit Derivatives
What are the most common credit derivatives?
Credit default swaps (CDS) are the most commonly used type of credit derivates.
What are the characteristics of a credit derivative?
A credit derivative consists of two parties, a creditor and a debtor. These privately held contracts are negotiable and traded over the counter. They help minimise credit risk, providing higher liquidity and better risk management.
What are credit derivative instruments?
A credit derivative relies on underlying instruments, including bonds, loans and debt obligations, among others.
As India continues to adopt digital payments, understanding the difference between NACH and ECS can help you manage recurring transactions more effectively. Both systems are used by banks, financial institutions, companies and government bodies for repetitive payments and collections.
ECS and NACH can be used for transactions such as loan EMIs, utility bills, insurance premiums, salaries, pensions and other recurring payments.
An ECS/NACH mandate is an authorisation given by an account holder allowing specified recurring credits or debits to be processed through their bank account according to the agreed amount, frequency and validity conditions.
While NACH ECS systems serve similar purposes, they differ in their infrastructure, mandate-processing mechanisms, coverage and operational framework.
Read on to understand the ECS NACH meaning, ECS NACH full form, how each system works, what an ECS/NACH mandate means and the key differences between NACH and ECS.
What Is NACH?
NACH full form is National Automated Clearing House.
NACH is a centralised, web-based payment system implemented by the National Payments Corporation of India (NPCI) for banks, financial institutions, corporates and government departments.
It facilitates high-volume electronic transactions that are repetitive or periodic in nature.
NACH can be used for transactions such as:
Loan EMI collections
Mutual fund investments
Insurance premiums
Utility payments
Salaries
Pensions
Dividends
Interest payments
Subsidies
NPCI introduced NACH with the aim of consolidating multiple ECS systems and providing a standardised payment framework with a wider national footprint.
Types of NACH
There are two primary types of NACH:
NACH Credit
NACH Credit is used when an organisation needs to send payments to a large number of beneficiaries.
Common examples include:
Salaries
Pensions
Dividends
Interest payments
Subsidies
Refunds
NACH Debit
NACH Debit is used when an organisation needs to collect recurring payments from multiple customers.
Examples include:
Loan EMIs
Insurance premiums
Mutual fund investments
Utility bills
Subscription payments
How Does NACH Work?
NACH uses a centralised framework to automate recurring payments based on an authorised mandate.
A typical NACH Debit process works as follows:
The customer provides a mandate: You authorise a bank, lender or service provider to debit your account according to specified terms.
Mandate details are submitted: The organisation or its sponsor bank submits the mandate through the applicable NACH process.
The mandate is authenticated: Depending on the available facility, authentication may take place through the bank and can include physical or electronic mandate processes.
A mandate reference is created: After successful registration, a Unique Mandate Reference Number (UMRN) may be generated for tracking the registered mandate.
The payment instruction is presented: On the scheduled payment date, the authorised debit instruction is presented under the registered mandate.
Your bank processes the transaction: Subject to a valid mandate and sufficient account conditions, the specified amount is debited from your account.
The payment is settled: The funds are processed through the NACH framework and credited to the relevant beneficiary or organisation.
Once registered, the mandate allows recurring transactions to be processed without requiring you to manually authorise every scheduled payment.
What Is ECS?
ECS stands for Electronic Clearing Service.
ECS is an electronic payment system introduced by the Reserve Bank of India (RBI) for processing repetitive and periodic bulk payment transactions.
It has traditionally been used by banks, companies, corporations and government institutions to process payments such as:
Salaries
Pensions
Dividends
Interest payments
Utility bills
Insurance premiums
Loan instalments
ECS operates through clearing arrangements and includes both bulk credit and debit transactions.
NACH was subsequently introduced by NPCI as a centralised system designed to consolidate multiple ECS systems and provide more standardised nationwide processing.
Types of ECS
ECS primarily operates in two forms:
ECS Credit
ECS Credit is used when an organisation needs to make payments to multiple beneficiaries.
Examples include:
Salary payments
Pensions
Dividend distributions
Interest payments
Refunds
ECS Debit
ECS Debit is used for collecting recurring amounts from multiple bank accounts.
Examples include:
Loan EMIs
Utility bills
Insurance premiums
Card payments
Other recurring dues
How Does ECS Work?
A typical ECS Debit process involves the following steps:
The customer provides authorisation: You give the organisation permission to debit your bank account through an ECS mandate.
The mandate details are collected: Information such as your bank account details, permitted amount, payment frequency and validity period may be included in the mandate.
The mandate is authenticated: The applicable bank verifies and records the mandate according to the prescribed process.
The organisation submits payment instructions: On the scheduled date, the organisation sends debit instructions through its sponsor bank to the relevant clearing arrangement.
The customer’s bank receives the instruction: Your bank checks the payment instruction against the applicable mandate.
The account is debited: If the transaction meets the applicable conditions, the authorised amount is debited from your account.
The funds are settled: The clearing process transfers the amount to the organisation or beneficiary.
What Is an ECS/NACH Mandate?
An ECS or NACH mandate is an instruction through which you authorise recurring transactions from your bank account.
For example, when you take a loan and agree to repay your EMI automatically every month, you may authorise the lender to present recurring debit instructions through an applicable payment mechanism.
A mandate can contain details such as:
Account holder’s name
Bank account details
Name of the organisation collecting the payment
Maximum authorised amount
Frequency of debit
Purpose of the payment
Start and end date or validity period
Customer authorisation
ECS Mandate Meaning
An ECS mandate authorises recurring debit transactions through the Electronic Clearing Service framework.
The bank can debit your account only on the basis of a valid mandate according to the applicable process.
NACH Mandate Meaning
A NACH mandate authorises recurring transactions under NPCI’s National Automated Clearing House framework.
Depending on the participating bank and facility available, a NACH mandate may be registered through physical or electronic processes.
Once registered, the mandate can be used for recurring transactions according to its authorised terms.
Difference Between NACH and ECS
Although ECS and NACH are both used for repetitive electronic transactions, NACH was designed as a more centralised and standardised system.
Here are the major differences:
Basis
ECS
NACH
Full Form
Electronic Clearing Service
National Automated Clearing House
Operator/Framework
Introduced under RBI’s electronic clearing framework
Operated by NPCI
System Structure
Traditionally operated through multiple clearing centres and arrangements
Centralised national platform
Coverage
Historically linked to participating clearing locations and banks
Designed to provide a wider national footprint across participating banks
Transaction Types
Supports both ECS Credit and ECS Debit
Supports both NACH Credit and NACH Debit
Common Uses
Salaries, dividends, pensions, EMIs, utility bills and insurance premiums
Salaries, subsidies, pensions, EMIs, SIPs, utility bills and insurance premiums
Mandate Processing
Traditionally involves ECS mandate authentication and clearing-house-based processing
Supports standardised mandate management, including electronic mandate facilities where available
Mandate Reference
Reference and tracking mechanisms depend on the ECS arrangement
Registered NACH mandates may receive a Unique Mandate Reference Number (UMRN)
Processing Infrastructure
Older decentralised clearing framework
Newer centralised NPCI framework
Standardisation
Processes could vary across clearing arrangements
Designed to harmonise standards and practices nationally
Digital Mandates
Traditionally more dependent on bank/user mandate processes
Supports electronic mandate registration through participating banks and authentication modes
Best Suited For
Existing ECS arrangements and repetitive payment instructions
Large-scale, standardised and recurring electronic payment processing
The key difference in the ECS vs NACH comparison is therefore not their basic purpose. Both support repetitive payments. The difference lies mainly in how the underlying systems are structured and processed.
NACH provides a centralised NPCI platform designed to standardise recurring payment processing across participating banks.
ECS Return Charges
ECS return charges may apply when an ECS Debit transaction cannot be completed.
Common reasons can include:
Insufficient account balance
Incorrect account details
Account-related restrictions
Invalid or mismatched mandate information
Other bank-specific return reasons
ECS return charges are not fixed. The amount charged depends on the bank, lender or financial institution and the applicable terms of the product.
If the failed ECS transaction relates to a loan EMI or another credit obligation, repeated missed payments may also affect your repayment history when reported by the lender.
Check the applicable schedule of charges before setting up recurring payments and maintain sufficient funds in your account before the scheduled debit date.
NACH Return Charges
NACH return charges may apply if a debit instruction presented under a NACH mandate is returned or cannot be processed.
Possible reasons include:
Insufficient funds
Invalid or inactive account
Mandate-related issues
Account restrictions
Other applicable return reasons
Like ECS return charges, NACH return charges vary across banks and lenders. There is no single fixed ₹200–₹750 charge that applies to every NACH transaction.
If the NACH instruction is linked to a loan EMI, repeated payment failures can result in missed or overdue repayments and may affect your credit profile when reported by the lender.
ECS vs NACH: Which One Is Better?
NACH offers several advantages for modern recurring-payment requirements because it uses a centralised NPCI framework and was created to standardise payment processing across a wider banking network.
However, whether you use ECS or NACH may depend on:
Your bank
The organisation collecting or sending the payment
Existing mandate arrangements
Availability of NACH/e-mandate facilities
Type of transaction
As a customer, you may not always need to choose between ECS and NACH yourself. The bank, lender or service provider generally informs you about the mandate mechanism supported for the relevant transaction.
Both ECS and NACH can help automate recurring payments and reduce the need to manually make the same payment every month.
For other everyday payment needs, you can also use the Fibe Axis Bank Credit Card, which supports UPI-linked payments and offers benefits such as cashback of up to 3%, subject to applicable terms and conditions.
Download the Fibe App or register through the Fibe website to check eligibility and apply.
FAQs on NACH and ECS
1.What Are the Advantages of NACH Over ECS?
NACH was designed as a centralised national platform to consolidate multiple ECS systems.
Its advantages can include:
Wider standardisation across participating banks
Centralised processing
Structured mandate management
Electronic mandate facilities where supported
UMRN-based tracking for registered mandates
Support for large-scale recurring credit and debit transactions
The actual registration and processing timelines can vary depending on the bank, mandate type and transaction.
2.What Is the Difference Between ECS and a Mandate?
ECS is an electronic payment mechanism used for repetitive bulk credits and debits.
A mandate is the authorisation given by the account holder allowing transactions to be processed according to specified conditions.
Therefore, ECS is the payment mechanism, while the ECS mandate is the customer’s authorisation for the relevant recurring debit.
3.How Much Are ECS Return Charges?
ECS return charges are not fixed and vary between banks, lenders and other financial institutions.
Check the applicable schedule of charges or loan terms to know the exact amount that may be charged if an ECS transaction fails.
4.Are ECS and NACH the Same Thing?
No, although they serve similar purposes.
ECS is the older electronic clearing framework for repetitive bulk transactions, while NACH is NPCI’s centralised platform designed to consolidate multiple ECS systems and standardise recurring payment processing nationally.
Both systems support credit and debit transactions.
5.What Does an ECS or NACH Mandate Mean?
An ECS or NACH mandate is an authorisation provided by an account holder for specified recurring transactions to be processed through their bank account.
For example, you may give a mandate to a lender allowing your monthly loan EMI to be automatically debited on a particular date.
The mandate generally specifies conditions such as the amount or maximum amount, frequency, purpose and validity period.
6.How Do I Set Up or Register an ECS/NACH Mandate?
The exact process depends on the bank, lender or service provider.
A typical process may involve:
Receiving the mandate form or electronic mandate request from the organisation
Providing the required bank and payment details
Specifying or reviewing the debit amount, frequency and validity
Authorising the mandate using the applicable method
Bank verification and registration
Receiving confirmation once the mandate becomes active
For NACH, electronic mandate registration may be available through participating banks using supported authentication methods.
7.Can I Cancel an ECS or NACH Mandate Once It Is Registered?
Yes, mandates can generally be withdrawn or cancelled according to the applicable process.
For ECS Debit, RBI guidelines recognise the account holder’s right to withdraw the mandate and treat the instruction similarly to a stop-payment request.
For NACH mandates, cancellation mechanisms are available under the NACH mandate-management framework. The exact process can depend on the bank and the type of mandate.
Contact your bank, lender or service provider and follow the applicable cancellation procedure. Do not assume that simply stopping the underlying service automatically cancels the registered banking mandate.
You can easily transfer EPF online on the EPFO portal, which you may need to do if you switch jobs. If required, your employer will register you on the Employees Provident Fund Organisation (EPFO) portal. As per the regulations, both you and the employer contribute to your account to build a corpus for retirement.
While you can withdraw the EPF amount, opting for a provident fund transfer is always better to build a substantial corpus for retirement.
To know how to transfer EPF online and why it is significant, read on.
Why Should You Choose EPF Transfer Instead of Withdrawal?
These are a few crucial points that you must be aware of:
When you are employed by a PF-registered employer, the company will open your Employee Provident Fund account
Both you and the employer contribute 10-12% of your gross salary into this account, which earns interest
This helps you accumulate funds, which you can use during retirement or during other times of need
However, when you leave a job, you have two options:
Withdraw the EPF amount and close your account if you have not been employed after 60 days of leaving the previous job
Carry out the provident fund transfer online, retain your EPF membership and transfer the funds to an EPF account with the new employer
Retaining your EPF membership by transferring it is advisable because:
It allows you to build a good corpus for the future
You will have to pay the tax deducted at source (TDS) if you withdraw the EPF amount without completing 5 years of service with the current employer
Step 1: Visit the EPFO’s Unified portal and log in using your credentials
Step 2: Go to the ‘Online Services’ tab and select ‘One Member – One EPF Account (Transfer Request)’
Step 3: Authenticate your PF account and the current employer details
Step 4: Click on the ‘Get Details’ to check the previous employer’s details
Step 5: Choose ‘Previous Employer/Present Employer’ in the ‘Assessment Through’ section based on the availability of an authorised signatory holding DSC
Step 6: Provide UAN and click on ‘Get OTP’
Step 7: Enter the OTP received on your registered mobile number and click on ‘Submit’
Step 8: Check the tracking ID and take a printout of Form 13 once redirected
Step 9: Sign this form and submit it to the employer within 10 days of obtaining it
Documents Required to Complete EPF Transfer
Now that you know how to transfer EPF online, submit these documents to complete the process:
Valid ID proof: Aadhaar card, Driving licence, PAN card
Universal Account Number (UAN)
Provident Fund account number
Current and old PF account details
Details of the present employer
Bank account details
Establishment number
How to Check the Status of PF Transfer
You can visit the ‘Member Claim Status’ page on the EPF India website to check your PF transfer status. Select the option of ‘Click here to get redirected to the passbook application’ and sign in using your UAN and password to continue.
Once your previous employer approves the claim and sends it to EPFO authorities for approval, your provident fund transfer will be completed in a few days. In case you need funds, you can get a quick and hassle-free Instant Personal Loan from Fibe. With us, you can get funding of up to ₹5 lakhs and enjoy speedy disbursal. Download the Personal Loan App or log in to our website to secure a loan with an easy repayment schedule and affordable interest rates.
FAQs on How to Transfer EPF Online
How to transfer EPF online?
You can transfer EPF online through the EPF Member portal. All you have to do is fill out a Composite Claim Form to apply for the EPF transfer when switching jobs.
Why is EPF not transferred?
There can be several reasons why your provident fund transfer could have failed, including:
Your application does not have a signature from the previous employer
Your UAN may not be linked to the EPFO portal
Your KYC details may not be verified on the EPFO portal
Your documentation is not complete
The information provided does not match with the information in the database
Non-compliance with the rules and regulations of EPF transfers
You may have submitted incorrect account details
System errors or technical glitches
What happens to EPF after leaving a job?
When you leave a job, you have these options:
You can withdraw the EPF amount and settle your account if you don’t join another job after 2 months
If employed, you can opt for a provident fund transfer to keep your savings intact and continue your membership
Do we need to transfer EPF separately?
When switching jobs, you can choose the following options:
Close your current EPF account and open a new account with the new employer
Filing a provident fund claim online can help in the partial or complete withdrawal of funds, allowing you to manage unexpected financial needs or planned expenses. The Employee Provident Fund (EPF) is a savings scheme initiated by the Central Government, where you and your employer make equal contributions, which helps you build a sizeable corpus post retirement.
However, you need to file different forms when making a claim, depending on the purpose for which you plan to withdraw the amount. For example, you need to submit Provident Fund Application Form 19 to settle your PF account once you reach retirement age.
Read on to learn how to fill out PF Forms, make a provident fund claim online, and more.
There are various EPF forms that you need to fill out based on specific purposes. Here are a few details about them:
Form 2: It is a nomination and declaration form to furnish details about the account nominee.
Form 5: It needs to be submitted by employers to the EPF Commissioner’s office before the 25th of every month.
Form 5 (IF): In case of the employee’s death, the legal heir or nominee needs to fill out this form to claim insurance benefits.
Form 10C: You can submit this form to withdraw your pension amount during financial emergencies. Note that out of your 12% contribution towards the EPF account, 8.33% is contributed to your EPS or pension account.
Form 10D: You can fill out this form to avail yourself of monthly pension benefits once you retire.
Form 11: This is a self-declaration form wherein you submit basic details related to your EPF account. It is mandatory to submit this form when you start a new job.
Form 14: You can link your LIC policy with your PF account by submitting this form to the nearest EPFO office.
Form 15G: You can submit this form to avoid TDS deduction if you plan to withdraw your PF amount before completing 5 years of service with the current organisation. Know that if your withdrawal amount exceeds ₹50,000, it attracts tax deductions.
Form 19: The Provident Fund Application Form 19 allows you to make a complete withdrawal and settle your EPF account.
Form 20: The legal heir or nominee can submit this form upon the death of the EPF account holder.
Form 31: This form allows you to make partial withdrawals only on certain conditions, which include meeting medical emergencies, being unemployed for more than 2 months, managing wedding expenses, and more.
Documents Required for PF Claims
In addition to the applicable PF claim form, here are other documents you need to submit:
Composite Claim Form
Bank account statement
Identity proof
Address proof
Two revenue stamps
One cancelled cheque with your account number and IFSC code visible
ITR Forms 2 and 3 (if you withdraw your EPF amount before completing 5 years of service with the current employer)
Follow these steps to claim your PF amount online:
Visit the EPFO’s UAN portal
Enter your UAN and password, and click on ‘Sign in’
Navigate to the ‘Manage’ tab to find the ‘KYC’ option
Check your KYC details and hit the ‘Verify’ button
Go to the ‘Online Services’ option and click on ‘Claim (Form-31, 19 10C & 10D)’ from the drop-down menu
Verify your account information, KYC and other service details
Enter the bank account number and click on ‘Verify’
Sign the ‘Certificate of Undertaking’ to proceed and click on ‘Yes’
Select the ‘Proceed for Online Claim’
Choose the claim you want to file under the tab ‘I Want to Apply for’
Select ‘Form 31’ to withdraw your funds and finally submit your application
As you can see, filing a provident fund claim online or offline is essential if you need access to funds. Another solution to help you tackle financial emergencies is to opt for Fibe’s quick and hassle-free Instant Personal Loan.
We provide funding of up to ₹5 lacs with an easy repayment schedule extending up to 36 months. To secure a loan at affordable rates and within a few minutes, download the Instant Loan App or log in to our website.
FAQs on How to File a Provident Fund Claim Online
How do you fill out the EPF withdrawal form and process claims online?
To make a withdrawal from your EPF account, you will need to make a request on the EPFO’s UAN portal. All you have to do is fill out the Provident Fund application Form 19, Form 10C, Form 10D, Form 31, or other forms based on the purpose of withdrawal.
How to fill out Forms 19 and 10C for PF withdrawal?
To fill out Forms 19 and 10C for PF withdrawal and file a provident fund claim online, visit the UAN portal of the EPFO. While Form 10C allows you to make a withdrawal while retaining your EPF membership, you can settle your EPF account with Form 19.
How can I withdraw my final PF amount online?
To withdraw your final PF amount online and settle your EPF account, visit the EPFO’s UAN portal and submit Form 19.
