ECS or Electronic Clearing Service allows for funds to be transferred from one bank account to another. Institutions often take advantage of ECS as it allows for various payments to be made with ease. These payments range from the distribution of interest and the payment of salaries to the allocation of pension and more. You can also use ECS to pay a number of bills including those pertaining to but not limited to your –
- telephone usage
- water consumption
- equated monthly installments (or EMIs)
- SIP investments
ECS allows you to conduct credit and debit transactions with ease.
Understanding the ECS Mandate Form
Should you want to activate ECS transactions, you need to inform your bank of the same with the aid of an ECS mandate form that gives authorization to another institution that is then entitled to make credit or debit payments via your Bank. This mandate houses information pertaining to your bank account along with details relevant to your bank account.
The institution you give authorization to is then responsible for communicating information pertaining to the amount credited and debited to their account. They are also required to make clear the date of credit along with other pertinent details relevant to the payment in question.
You will be informed when your money has been debited from your account via communication from your bank which could be in the form of text messages or alerts which are sent to your registered mobile number.
An ECS user has the authority to specify the following.
- The maximum amount that can be debited from an account.
- The purpose of the debit
- The time frame during which the mandate provided is valid
Examining the Difference Between ECS and NACH
Let’s take a look at the difference between ECS and NACH :
- Operational Centers– While ECS is presently operating in 89 centers spread across the country and is operated by the RBI in 15 centers, the NACH platform is set to have 82000 platforms in addition to bank branches across the country.
- Operating Model– The ECS platform makes use of a manual operating platform while NACH consolidates multiple ECS platforms and seeks to remove local barriers.
- Presentation and Settlement– For presentation and settlement, time taken by ECS is 3 to 4 days while NACH takes a single day for both.
- Disputes– In the case of ECS, disputes are resolved by the destination bank and sponsor bank in question while NACH has an electronic platform that allows for disputes to be raised and resolved.
- Mandate Management System – Under ECS, mandate management is reliant upon physicals which leads to time lags and verification issues. NACH in contrast has an advanced mandate management system in place which allows for the easy verification of mandates.
The NACH platform can be understood to be an improved version of the ECS platform as it is more uniform in its offerings and services. Visit Finserv MARKETS to understand more pertaining to the same.