Electronic Clearing Service ECS
The word ECS is quite widely used today and all of us dealing with money has heard of it. ECS is regulated by Reserve Bank of India and processed by National Automated Clearing House (NACH), which is operated by National Payments Corporation of India (NPCI). Electronic Clearing Service as the name suggests is a transfer of funds through the electronic medium and is automated at the consent of the person whose account is debited. These transactions are repetitive in nature and the period between transactions is specified.
Institutions nowadays use ECS for paying salary, pension, dividend, etc. They also receive their collectibles like utility bills, loan repayments, insurance premium, regular investment in mutual funds,etc
Types of Electronic Clearing Service
There are 2 types of ECS, one is debit and the other one is credit. The ECS mandate can be cancelled by the person whose account is being debited directly from his Bank or through the beneficiary institution. The amount and tenor can also be varied. One may also opt for a variable amount ECS and put a cap on the maximum limit. This feature is particularly beneficial for those who pay their utility bills through ECS.
ECS not only save paper, but also assists in smooth reconciliation and ensures that the payments are made in time.
Uses of Electronic Clearing Service for Common Man
ECS can be used for automated monthly payment of your Electricity Bills, Water Bills, Telephone Bilss and other utility Bills. For this you have to enable ECS facility in your Bank Account and register the regular Utility providers in it. You can also specify the limits of amount than can be deducted by each utility provider.
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I read about this in a cash management article just before I clicked on this link. When you are managing cash, setting up automated ECS makes your life a lot easier. For debt repayments, such as loans or just paying normal bills for electricity or water or telephone. Saves time and paper!
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