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The ECS full form is Electronics Cleaning Service. It is a way of digitally transferring funds and is mainly used for bulk transactions. For example, payment of salaries, dividends, and loan instalments, among others. ECS transfers money from one bank account to several bank accounts or from multiple bank accounts to a single bank account. It also handles transactions processed under NACH/National Automated Clearing House which is handled by the NPCI/National Payments Corporation of India.
Types of ECS
The Reserve Bank of India uses the ECS method for routine and periodic payments. ECS has two types:
- ECS Credit- When an institution makes credit payments to the bank account of a person. Examples include wage credit, dividends, pensions, and more.
- ECS Debit- An individual makes EMI payments for mutual funds, loans, policy primes, and so on.
ECS Benefits
There are several benefits of ECS. Some of them are listed below.
- Useful in strengthening customer relationships
- Reduces the usage of paper
- No late payment penalty
- Assists in the fast payment of bills
- Improves the client’s payment of crucial utility bills. For example, electricity bills, telephone bills, and internet bills.
- Assists in the payment of mutual funds, insurance premiums, loan payments, and credit card payments, among others.
How do you make use of an ECS scheme?
- An ECS scheme can be utilized by notifying the bank and giving the authorized mandate to the institution. The organization will then be allowed to credit or debit the transactions. The mandate would include the branch as well as the account holders details.
- However, it would be the duty of the institution to provide information related to the amount that needs to be either credited or debited. The organization is also liable to provide the credit date and other transactional details to the bank.
- An individual will be notified with SMS or cellphone notification when the money has been debited.
- The customer needs to mention the maximum amount of money that can be deducted from his/her bank account, the reason for the debit, and the duration for the submission of each mandate.
Also read- Things to Consider When Transferring Money Abroad
ECS allows smooth digital transactions of money from one bank account to another. The ECS full form is Electronics Cleaning Service. There are mainly two types of ECS. ECS credit and ECS debit. It can be utilized for strengthening customer ties, and fast payment of bills, etc.
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