ECS Mandate Meaning
ECS Mandate Meaning – Electronic Clearing Service or ECS was introduced by RBI to allow banks and financial institutions to debit loan EMIs automatically from the customers’ account. The entire process was built on a mandate commonly known as ECS mandate that gives the clearing house, in this case NACH or National Automated Clearing House, the authority to debit monthly EMI from customers’ bank account and credit the same to their loan account or lender’s account. The ECS mandate ensures transparent and hassle-free EMI transactions and payments.
Types of ECS Mandate
Here are some types of ECS mandate commonly used in India:
1. ECS Debit
ECS debit happens when money is automatically deducted from your account in the form of EMI, credit card bill, utility bills, and subscription plans, among others. ECS debit helps you maintain discipline in terms of loan EMI, bills, and other payments.
2. ECS Credit
ECS credit is commonly used for bulk transfers performed by institutions to make payments such as dividends, interest, salary, pension, etc.
Based on the geographical network of bank branches, there are 3 types of ECS operated by the RBI. These are:
1. Local ECS
Local ECS is accessible at 81 centers/locations across the country. The branch coverage at each of these ECS centers is limited to the bank’s geographical coverage, typically one city and satellite towns and suburbs adjacent to the city.
2. Regional ECS
Regional ECS is provided at 9 centers/locations throughout the country. Regional ECS enables coverage of all central enabled branches in a State or group of States and can be used by institutions seeking to reach beneficiaries within the State/ group of States.
3. National ECS
National ECS is the centralized version of ECS Credit, which was introduced in October 2008. The Scheme enables the coverage of all core-banking enabled branches throughout the country.
Features and Benefits of ECS Mandate
Some of the features and benefits of ECS Mandate are:
1. Offers Convenience
The ECS mandate enables automatic payments, which eliminates the need for manual intervention every time a payment is due. This makes it a convenient option for individuals and businesses who have to make regular payments.
Since the ECS mandate is automated, it saves time and effort that would have been otherwise spent in initiating and tracking individual payments.
3. Provides Accuracy and Transparency
The automated nature of ECS mandate reduces the chances of errors in payment processing as it eliminates the possibility of manual errors.
4. Offers Flexibility
It provides flexibility in terms of payment frequency, allowing individuals and businesses to choose payment schedules that suit their needs.
ECS mandate charges are zero. This makes it a cost-effective payment option as it reduces the need for manual processing, which in turn reduces administrative costs.
6. Minimal Paperwork
The ECS mandate requires minimal paperwork, and the authorisation form can be completed easily.
7. Zero Human Intervention
The entire process is automatic and doesn’t require any human intervention.
ECS Mandate Charges
The Reserve Bank of India has deregulated the fees charged for ECS transactions. Bank branches cannot charge processing or service fees for debiting or crediting customers’ accounts. However, the sponsor banks or the clearing house must disclose the ECS charges, if any, transparently.
How to Avail an ECS Mandate?
To avail of the ECS mandate, customers must notify their bank and provide an ECS mandate authorizing the institution to debit or credit the payments through the bank. The mandate includes information about the customer’s bank branch and account information. The bank will provide an ECS mandate form, which must be completed and signed as an official authorizing document.
It is the ECS user’s responsibility to communicate the following details:
- The amount being credited or debited to the account
- Date of the debit
- The purpose of the debit
- The validity period for each mandate
- Other relevant payment details.
The bank will notify you that the money has been debited from your account via mobile alerts or messages.
How to Cancel an ECS Mandate?
Users can discontinue the ECS mandate at any time, completely at their discretion. There are two steps you must take to discontinue your ECS mandate:
- The service provider, who is the payment recipient, must be given a written communication in the manner specified by them to discontinue the ECS services.
- The bank, which is the payment channel, must be given a duly filled ECS cancellation form stating your desire to discontinue. The application must be given at least one week prior to the EMI debit date.
ECS mandate gives users the flexibility and transparency in their transactions. Instead of paying utility bills by cash or cheque payments, an individual or a company can make it through ECS. Suppose the company has the facility of payment through ECS. In that case, the client can mandate the company to automatically receive the utility bill amount from his bank account without any hassle.
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What is the full form of ECS?
ECS, or Electronic Clearing Service, is an electronic clearing system that allows for paperless credit / debit transactions that are linked to your account as well as a faster method of effecting periodic and repetitive payments.
What are the types of ECS mandate?
There types of ECS mandate include- ECS credit, ECS debit, local ECS, regional ECS, national ECS.
What can you do to withdraw the ECS mandate once given?
The mandate given is equivalent to a customer’s cheque. The only requirement of the scheme is that the customer notify the ECS user in advance so that the debits are not included.
Who processes ECS transactions in India?
ECS transactions are processed under the National Automated Clearing House (NACH) run by the National Payments Corporation of India (NPCI).
Is there any limit on transactions in ECS credit or ECS debit?
No, there is no limit on transactions in both types of Electronic clearing service or ECS