What is electronic clearing service? - Letsdiskuss
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Sandeep Jain

Financial Advisor | Posted 21 Feb, 2020 |

What is electronic clearing service?

Pranav Singh

Blogger | Posted 21 Feb, 2020

Have you heard about people telling anyone else to use the ECS Service to clear payments? ECS stands for Electronic Clearance Service. It is a service that your bank provides you to transfer funds from one account to another electronically. 

ECS Service is available for both credit and debit purposes. The basic purpose of an ECS Service is to give an ECS Mandate to any service provider to debit an amount. 

When you sign an ECS Mandate, then it means that you are giving standing instruction to a bank and more. It is to deduct an amount from your bank account for payment towards EMIs and more. 
ECS Service can also be used for payment of bills, EMIs, Salary disbursement, pension and more. 

How do you avail the Electronic Clearance Service (ECS)?

You will need to inform your bank and provide it with an ECS Mandate that empowers the institution to debit or credit via the bank.

What are the service charges related to ECS Service on the customer?

The Reserve Bank of India (RBI) has done away from charging any amount that can be levied by sponsor banks from institutions. The RBI has instructed the destination bank to afford ECS Credit free of any amount to the account of the beneficiary. Thus, if you want to use the ECS Service, then you can use it without any charges. 

Nowadays, an even robust method of transferring money from one bank to another has evolved in India than the ECS Service. It is known as NACH - National Automated Clearing House. 
We hope that this solves your query!