What is ECS in banking?
In this article, we can understand what is ECS in banking? The full form of ECS is Electronic Clearing Service. We can send money from one bank to another through an electronic clearing service. electronic clearing service can be used to pay bank dividends, interest, pension, telephone bills, light bills, water bills, mutual fund SIP.
Types of ECS –
After learning what is ECS in banking? Now we can understand various types of ECS following are the two types of ECS –
1. ECS debit –
Electronic clearing service user means the bank has to register in the electronic clearing service center. The customer gives authorization to the bank regarding the electronic clearing service. To avail of this, the customer has to provide his details to the bank ex. customer’s name, bank name, branch name, account number and MICR code, etc. the customer gives a settlement date to the bank.
The settlement date is the date on which the Electronic clearing service will be debited from the customer’s account. After receiving the settlement date, the bank gives the customer information to the Electronic clearing service center, after which the Electronic clearing service amount is debited.
Electronic clearing service amount is credited to the bank to which the money is sent. This service does not make it difficult for the customer to pay the check regularly.
2. ECS Credit –
ECS Credit is a payment service that is used when an organization wants to credit a large number of beneficiaries’ accounts. For example, it is used for a subsidy, pension, salary of employees, credit of money for a scheme by the government. The customer also gets benefits through ECS credit.
Direct money is deposited in the customer’s bank account. At the same time, banks get the benefits. Electronic clearing service reduces the workload of banks and also reduce the use of paper. This means that electronic clearing service also achieve the goal of green banking.
Benefits of electronic clearing service –
1. Automatic debit system –
What is ECS in banking – If the customer wants to pay SIP installments, he does not have to come to the bank regularly. By applying to the bank for an electronic clearing service, he can cut install SIP installments from his account every month.
2. It can be managed as it should be-
What is ECS in banking – Electronic clearing service allows the customer to do as long as he wants to pay for something. The customer can also cancel the electronic clearing service on the account after the installment expires after some time. The mandate of electronic clearing service can be revoked by the customer based on a single notice. Therefore, electronic clearing service can be started and canceled in a very simple and easy way.
3. No fee of any kind –
What is ECS in banking – The bank does not charge any fee from the customer for electronic clearing service. This service is available to the customer for free. The bank itself sometimes has to pay 25 paise or 50 paise for each transaction as per the rules of a clearing house.
4. Stop payment facility-
What is ECS in banking – Electronic clearing service also provides a stop payment facility to the customer. But if the customer wants to make a stop payment, he should inform the bank as soon as possible.
5. On-time bill payment –
What is ECS in banking – For a bill payment, the customer has to give a settlement date. Due to the settlement date, money is deducted from the customer’s account on the same date every month. Payment of all bills can be done on time. E.g. Payment can be made in telephone bill, light bill, water bill, mutual fund SIP.
6. Beneficial for the environment-
What is ECS in banking – Paper is used sparingly in the electronic clearing service. At the same time, the customer does not always have to come to the bank. Therefore, the pollution caused by travel is reduced.
7. Speed in the work of banks-
What is ECS in banking – The electronic clearing service shows that the banks are losing money as the benefits of the schemes devised by the government with the help of computers and the internet are being credited to the direct account, saving the work of the bank employees. So they can focus on other important things.
8. Savings in bank expenses-
What is ECS in banking – Electronic clearing service saves banks costs. Machinery or other tools required for printing etc. There was a reduction in the cost of.
History of electronic clearing service –
What is ECS in banking- The electronic clearing service facility was first launched by Indian Post in August 2003 in Mumbai. Later this scheme was introduced all over the country by RBI.
How to avail electronic clearing service?
What is ECS in banking- To use the electronic clearing service, the customer first has to write a mandate regarding electronic clearing service in the bank. After that, the customer can avail of this service. The electronic clearing service mandate form has to mention the customer’s name, bank name, branch name, account number, MICR number, etc.
The full form of NACH is the National Automated Clearing House. It was established by NPCI (National Payment Corporation of India). NAC, like ECS, is a computer-based service that is used for repeatedly monthly payments. The modern form of ECS is NACH.
1. NACH credit-
nach credit is a means of simultaneously sending money from your account to another’s account, yes salary, they use it to pay dividends.
2. NACH debit-
To deduct money from another’s account and deposit money in your account is to use nach debit yes light bill, water bill, insurance premium, and sip.
NACH mandate –
Nach mandate is the permission given by the customer to the bank to deduct money from his account every month. To avail of the benefits of nach service, the customer has to first write the nach mandate.
Differences between ECS and NACH –
|ECS is available in limited centers.||NACH is available in all the centers.
|ECS is a manual procedure.||The nach service has come into existence by correcting the shortcomings in ecs.
|No online dispute management system.||There is an online dispute management system.
|It takes 3 to 4 days to collect the money.||The money is collected in one day.
|Approval of ecs takes 30 days.||Approval of NACH takes 48 hours.
What is ECS in banking?
what is ecs and how it works?
The full form of electronic clearing service is Electronic Clearing Service. We can send money from one bank to another through electronic clearing service.
How do I stop ECS charges?
You can stop ECS charges by cancelling ECS service. Electronic clearing service also provides stop payment facility to the customer. But if the customer wants to make a stop payment, he should inform the bank as soon as possible.
how can I start ECS service?
In order to use the electronic clearing service, the customer first has to write a mandate regarding electronic clearing service in the bank. After that the customer can avail this service. The electronic clearing service mandate form has to mention the customer’s name, bank name, branch name, account number, and MICR number etc.