ECS Full Form-What is ECS? ECS was launched by the RBI for facilitating bulk transfer of funds from one bank account to another bank account. Loan providers use this facility to debit loan EMIs on a fixed date from the bank account of the borrower.
ECS Full Form is mentioned below :
|Electronic Clearing Service|
What is ECS?
ECS is a technology-enabled process that facilitates a transfer of funds between two banks. The ECS is a “fund transfer network” between banks or other financial institutions. It gives a ‘pop-up’ notification to the beneficiary that their dues are debited from the beneficiary’s account. The beneficiary is then required to pay the amount that is debited to his/her account through another mode and this is verified by the bank after which the payment is finally credited to the beneficiary’s account. What are the Benefits of ECS? ECS allows banks to minimise their exposure to risk of non-repayment. They are also able to charge a small charge on payments through this service. ECS also reduces the transactions time and reduces the cost of funds.
How does ECS affect you?
• The interest rate is determined by ECS itself. Hence, banks are not liable for losses on the ECS account.
• There are no transaction charges for making ECS payment.
• ECS is exclusive of ‘trait’ of the loan instalments, whether EMIs, LSTCs or other. Note: ECS payments cannot be made through web banking.
• ECS payment is not transferable, even if one wants to make it for its own use, on margin money or in term deposits.
• ECS is made using net banking or ATM.
• ECS service is available from April 2017 onwards and you have the choice of using debit card (debit or credit) or net banking or ATM to make payments.
• ECS cannot be used to pay DTH charges or transfer to different bank accounts, on all payments made.
What are the benefits of ECS?
Electronic Clearing Service gives convenience to both the lender and borrower. The borrower can conveniently settle his/her loan dues on an agreed upon date from their bank account. * The last mile delivery of payment takes place through real-time transfer of funds in real-time from one account to another. No waiting period is required to be met before the principal is debited from the borrower’s account. What is required to setup ECS? ECS facility is available only on request to eligible individuals, even if the applicant is a resident of a State/Union territory/territorial area/deemed area and the loan is sanctioned under a bank or non-bank chalan arrangement.
ECS is intended to be an easy and transparent facility for LPs, especially in cases where an LPA is created. However, it is not possible to analyse and evaluate the performance of this facility without details on the mix of incoming and outgoing ECS transactions.