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Electronic Clearing System (Ecs) : By: Hari S Nair S3, B2 MGT 0905261 Imk, Alpy

The document discusses the Electronic Clearing System (ECS) in India. ECS allows for bulk payments and collections to be made electronically from one bank account to many accounts. There are two main types: ECS Debit, where funds are collected electronically from multiple accounts, and ECS Credit, where funds are paid out electronically to multiple accounts. The process involves institutions registering beneficiaries with an ECS center and submitting payment details, after which funds are transferred on scheduled dates with reports provided. ECS provides benefits like lower costs, ensuring on-time payments, and reducing the risks of fraud compared to paper-based payments.

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Hari S Nair
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126 views10 pages

Electronic Clearing System (Ecs) : By: Hari S Nair S3, B2 MGT 0905261 Imk, Alpy

The document discusses the Electronic Clearing System (ECS) in India. ECS allows for bulk payments and collections to be made electronically from one bank account to many accounts. There are two main types: ECS Debit, where funds are collected electronically from multiple accounts, and ECS Credit, where funds are paid out electronically to multiple accounts. The process involves institutions registering beneficiaries with an ECS center and submitting payment details, after which funds are transferred on scheduled dates with reports provided. ECS provides benefits like lower costs, ensuring on-time payments, and reducing the risks of fraud compared to paper-based payments.

Uploaded by

Hari S Nair
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 10

ELECTRONIC CLEARING

SYSTEM ( ECS )

By :
Hari S Nair
S3 , B2
MGT 0905261
IMK, ALPY.
WHAT IS ECS
 used by institutions for making bulk payment of
amounts towards distribution of dividend, interest,
salary, pension, etc., or
 for bulk collection of amounts towards telephone /
electricity / water dues, cess / tax collections, loan
installment repayments, periodic investments in
mutual funds, etc.
 bulk transfer of monies from one bank account to
many bank accounts or vice versa using the services
of a ECS Centre at a ECS location.
2
TYPES OF ECS
 Primarily there are two variants of ECS –
ECS Debit & ECS Credit

 ECS ( CREDIT )
 Institutions who has to make bulk / repetitive payments to a number
of beneficiaries'.
 User has to register with the centre & obtain consent from
beneficiaries
 ECS Credit is used for affording credit to a large number of
beneficiaries having accounts with bank branches at various
locations within the jurisdiction of a ECS Centre by raising a single
debit to an account of a bank . ECS Credit enables payment of
amounts towards distribution of dividend, interest, salary, pension,
etc., of the user institution.
3
HOW ECS CREDIT WORKS -
PROCESS FLOW

Data on Day- Reports on Day-1


1
Clearing
Sponsor Bank
House (ECS
Debit on Destination
centre)
Submits benefic.

Sched. branches
-Data Day-1

Day

Credit on Sched.
Beneficiaries’
Day A/Cs

User Institution Informing the Beneficiaries. 4

11
HOW DOES THE ECS CREDIT
SCHEME BENEFIT USER LIKE-
CORPORATE BODIES /
INSTITUTIONS?
 Savings on administrative machinery for printing, dispatch
and reconciliation of paper instruments that would have been
used had beneficiaries not opted for ECS Credit.
 Avoid chances of loss/theft of instruments in transit,
likelihood of fraudulent encashment of paper instruments,
etc.
 Efficient payment mode ensuring that the beneficiaries' get
credit on a designated date.
 Cost effective.

 Avoid chances of fraud due to fraudulent access to paper


instrument & encashment.
5
ECS ( DEBIT )
 any institution who has to receive / collect amounts
towards telephone / electricity / water dues, cess / tax
collections, loan installment repayments, periodic
investments in mutual funds, etc.

 ECS Debit is used for raising debits to a large number of


accounts maintained with bank branches at various
locations within the jurisdiction of a ECS Centre for
single credit to an account of a bank (that maintains the
account of the user institution).

6
ECS - PROCESSING OF UNCREDITED
PAYMENT INSTRUCTIONS CONTD...

Credit on Debiting the a/cs on


Sched Day-1 the Settlement
Day-1
Clearing
Sponsor Bank House
(ECS) Destination banks’
service branches
Credit on Sched.

Submit Benefic.
Details

Debiting the a/cs on Settlement Day-1


Day

Destination
branches 7
User Institution
SCHEME BENEFIT USER LIKE-
CORPORATE BODIES /
INSTITUTIONS?
 Savings on administrative machinery for collecting the
cheques from customers, presenting in clearing,
monitoring their realisation and reconciliation.
 • Better cash management because of realisation /
recovery of dues on due dates promptly and efficiently.
 • Avoids chances of loss/theft of instruments in transit,
likelihood of fraudulent access to the paper instruments
and encashment thereof.
 • Realisation of payments on a uniform date instead of
fragmented receipts spread over many days.
 • Cost effective.
8
AS TO CONCLUDE………

 The beneficiary need not visit his bank


 Cost effective.

 Freedom from paper handling and the resultant advantages of


handling, presenting and monitoring paper instruments
presented in clearing,
 The Reserve Bank of India has deregulated the charges to be
levied by sponsor banks from user institutions. No processing
charges are levied by the ECS Centres;

9
THANK YOU..

10

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