What is ECS – Full Form, Types, Advantages and How to Register
What is the ECS Full Form?
The full form of ECS in banking is Electronic Clearing Service. It is a method of transferring funds between bank accounts and is generally used for repetitive transactions by large organisations or by individuals, who want to make periodic payments, such as paying utility bills. Institutions and businesses generally use it to transfer funds to multiple bank accounts in one go, such as paying salaries to employees or dividends to shareholders in bulk. It was introduced by the Reserve Bank of India (RBI) in April, 1995 to make repetitive and bulk payments faster and more seamless.
Types of ECS
ECS can be categorised in two ways:
Based on the nature of transaction
1. ECS Debit
Used to make payments to multiple bank accounts, from a single account in bulk, usually on a recurring basis. E.g. to pay employee salaries
2. ECS Credit
Used to receive money into a single account from multiple accounts in bulk, usually on a recurring basis. E.g. to settle monthly credit card bills
Based on location
1. Local ECS
Currently, there are 81 centres in the country
2. Regional ECS
There are 9 such units across different regions
3. National ECS
It is the centralised unit based in Mumbai
Benefits of ECS
- Faster and hassle-free transfers, typically within a couple of days
- On-time credit or debit
- Convenient for customers since they don’t have to visit a bank
- Less paperwork, which means less administrative charges
- Easier reconciliation of transactions on both the payer and payee sides, reducing accounting errors
- Easier to follow the money trail, which means reduced chances of corruption
Also Read
How to Register for ECS?
A customer can follow the steps given below to set up an ECS mandate:
- Step 1
Download the ECS Mandate form
- Step 2
Enter the date
- Step 3
Indicate the bank account type for which you want to set up ECS
- Step 4
Enter your bank account number
- Step 5
Mention the IFSC Code in the indicated space
- Step 6
Mention your phone number and email ID (if applicable)
- Step 7
Fill in the exact amount (in words and digits) that should be deducted
- Step 8
Indicate the frequency of payment
- Step 9
Enter payee details, such as name, bank account number, IFSC Code, etc.
- Step 10
Sign the form
- Step 11
Submit it on your bank’s website or drop it at one of their branches
Final Word
With ECS (full form: Electronic Clearing System), RBI revolutionised the banking and finance sector in the 1990s. It is just as powerful and relevant today. ECS has made recurring bank transfers faster, more secure, and hassle-free.
For more such interesting topics, follow Navi-Pedia, our blog. Need instant cash? Why run from pillar to post when you can simply download the Navi App, apply today, and get cash transferred directly into your bank account within minutes? Try it now!
