Electronic Clearing Service (ECS) – FAQs

ECS debit system

Q.16. What is ECS (Debit) scheme? 

Ans: It is a scheme under which an account holder with a bank can authorize an ECS user to recover an amount at a prescribed frequency by raising a debit in his account. The ECS user has to collect an authorisation which is called ECS mandate for raising such debits. These mandates have to be endorsed by the bank branch maintaining the account.

Q.17. How does the scheme work?

Ans: Any ECS user desirous of participating in the scheme has to register with an approved clearing house. The list of approved clearing houses is available at RBI web-site www.rbi.org.in. He should also collect the mandate forms from the participating destination account holders, with bank's acknowledgement. A copy of the mandate should be available with the drawee bank.
The ECS user has to submit the data in specified form through the sponsor bank to the clearing house. The clearing house would pass on the debit to the destination account holder through the clearing system and credit the sponsor bank's account for onward crediting the ECS user. All the unprocessed debits have to be returned to the sponsor bank within the time frame specified. Banks will treat the electronic instructions received through the clearing system on par with the physical cheques.

Q.18. What are the advantages to the ultimate beneficiary?

Ans: • Trouble free - eliminates the need to go to the collection centres/banks by the customers and no need to stand in long ‘Q’s for payment
• Peace of mind - customers also need not track down payments by last dates.
• The debits would be monitored by the ECS users. 
 

Q.19. How does the scheme benefit the ECS users like corporate bodies/ institutions?

Ans: • The ECS user saves on administrative machinery for collecting the cheques, monitoring their realization and reconciliation
• Better cash management.
• Avoids chances of frauds due to fraudulent access to the paper instruments and encashment. 
• realise the payments on a single date instead of fractured receipt of payments.

Q.21. Can the mandate given once be withdrawn or stopped?

Ans: Yes. The mandate given is on par with a cheque issued by a customer. The only stipulation under the scheme is that the customer has to give prior notice to the ECS user, to ensure that they do not include the debits.

Q.22. Can the customer stipulate any maximum debit, purpose or validity period for the mandate?

Ans: Yes. It is left to the choice of the individual customer and the ECS user to finalise these aspects. The mandate can contain a maximum ceiling; it can also specify the purpose as also a validity period.

Q.23. What is the current coverage of the scheme?

Ans: Ans At present the scheme is in operation at 15 RBI centres (i.e. centers where RBI manages the Clearing House operations) and at other centres where Public Sector Banks manage the clearing operations. The list of centres is available at the RBI web-site under the procedural guidelines.

Q.24. Processing charges on individual transactions

Ans: RBI has waived its processing charges till March, 31, 2009.
No Charge for ECS Debit and Credit.
ECS Debit Returns – As applicable to Cheque return charges collected as of now.

Q.25. Which are the institutions eligible to participate in the ECS Debit scheme?

Ans:Utility service providers such as telephone companies, electricity supplying companies, electricity boards, credit card collections, collection of loan installments by banks and financial institutions, and investment schemes of Mutual funds, etc. are eligible to participate in the ECS debit scheme.