Everything you need to know ECS

ECS is an electronic account transfer mode from one bank account to another account. It is commonly utilised for majority transfers conducted by organisations for meeting expenses like salary, dividend, interest, pension, etc.

What is Electronic Clearing System?

Electronic Clearing System is the full form of ECS, an electronic mode of account transfer from one bank account to another. It is commonly utilised for majority transfers conducted by organizations for meeting expenses like salary, dividend, interest, pension, etc. ECS can be utilized to pay bills and other expenses such as utility businesses or making equated monthly installments of loans or SIP investments.

What are the advantages of ECS?

The advantages of using ECS to the clients are as follows:

• The end legatee does not need to make a routine visit to his bank to deposit the cash or paper instrument.
• The late realization of earnings, utilized in the receipt of the paper instrument, is eliminated.
• The user of ECS enables to save on executive machinery for printing, transmission, and reconciliation.
• Provided that the capacity to make income and confirm that the legatees' account gets credited on a specified date.

How does the ECS system work?

Credit: ECS expenditures can be accomplished by any organization that has to make majority or repetitious expenditures to a number of recipients or legatees. They provoke the transactions after recording themselves with an authorised clearinghouse. ECS users also include acquiring consent such as the account attributes of the beneficiaries for employing in the ECS clearings.

Under this scheme, the repetitious or regular expenses beneficiaries can also mandate the paying organisation to create ECS for expenditure. The ECS users desire to render payments and deliver the data in a specified structure to any identified clearinghouses. The clearinghouse will debit the account of the ECS user and credit the accounts of the recipient banks for furnishing onward credit to the accounts of the leading beneficiaries.

Debit: ECS debit is a procedure in which an account holder can permit an ECS user to regain a specified amount by presenting a debit on his account. The ECS user has to obtain an assignment called the ECS declaration for submitting such debts. These declarations have to be endorsed by the bank branch carrying the account.

Any ECS user experiencing the strategy has to register with an authorised clearinghouse. An ECS user should acquire the declaration forms from the participating goal account holders with the bank’s declaration. A certified copy of the declaration should be available with the drawee bank.