ECS Full Form - Electronic Clearing Service

by Devender

0 3964

What is the full form of ECS?

The full form of ECS is Electronic Clearing Service.

It is a way of funds transfer from one bank account to another via electronic mode. It is generally used for transactions that are repetitive or periodic in nature.

It is a completely monitored and electronic system known as part of the payment system with different mechanisms and functions. It is applicable when there is a need for a large no. of individual's transactions or one account to many transactions.

For example - the company transfer salaries into their employees account and the subsidiary transfer LPG. This system is used when there is a need for high transactions simultaneously or repetitive including weekly/monthly/yearly/quarterly payments of refunds/commission/pension/interest by various government departments/corporations/companies/banks.

ECS History

RBI (Reserve Bank of India) introduced the ECS as a faster method for periodic and repetitive payment.

ECS Types

ECS has two types which are:

ECS Credit - When an organization makes credit to employees' bank account for their salary. Credit in multiple accounts through a single account.
ECS Debit - When we are clearing loans from financiers for doing payments through EMI, premiums, mutual funds.

How to get ECS Scheme

In order to set up the ECS Mandate, one needs to get in touch with their bank and follow these steps:

1 The first step is to notify your bank and fill out the ECS form.

2 The ECS form can be obtained and filled out online while it can also be done from the nearest bank branch. This form authorizes the Bank to debit or credit the ECS.

3 It is the duty of the institute or organization to provide the necessary information such as the amount to be debited or credited, date and other relevant information.

4 Now, the user should set the limit to the maximum amount deductable from their account and a validity period for the mandate.

5 The user will be notified through mobile alerts or messages every time money is deducted from their account.

ECS comes equipped with a lot of flexibility so it can be cancelled anytime the user wants. The user needs to write an application to both the bank and the payment beneficiary before terminating. After that, fill out the ECS Cancellation form and submit it to the bank.

Benefits of ECS

Here are some of the benefits of ECS:

Minimize paper usage and increase customer satisfaction
Ontime bill payment without any delay
One can effortlessly pay their utility bills including mobile, tax, loan instalments, telephone, credit cards, etc.
This service is applicable to bulk payment making
Cost-effective
It is the fastest way for periodic payment