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    ECS,Electronic Clearance Service

    Introduction to Electronic Clearing Service (ECS)

    Going cashless is somewhat the motto of digital India and in a way also of the digital world wherein we make most of our payments through electronic means, be it card, UPI or any other mode of transfer. This is exactly the concept behind Electronic Clearing Service or ECS.

    What is Electronic Clearing Service or ECS?

    Electronic Clearing Service or ECS is a method of transferring funds electronically and is generally used for bulk transfers. This method is used for funds which are both repetitive and periodic in nature.

    This method of fund transfer is usually used by large organisations or institutions for bulky transfers like salaries, fees, pensions, interests, dividends, loan installments, etc. Electronic Clearing Service or ECS method can also be used for paying bills and clearing dues.

    In simple language, this method means transferring money from one bank account to many other bank accounts or from multiple bank accounts to one bank account. The Electronic Clearing Service also handles transactions which are processed under the NACH or National Automated Clearing House which is operated by National Payments Corporation of India (NPCI).

    In order to avail the Electronic Clearing Service, you need to inform your bank in which you hold an account and provide a mandate which will allow the organisation to either debit or credit the money through the bank.

    Types of Electronic Clearing Services or ECS

    There are basically two types of Electronic Clearing Services or ECS— Electronic Clearing Service or ECS Credit and Electronic Clearing Service or ECS Debit. Here we will see both these types in detail.

    Electronic Clearing Service or ECS Credit

    Electronic Clearing Service or ECS credit is used for offering to large beneficiaries by raising debit against the bank account of the customer or user institution. ECS credit includes payments towards dividends, interests, salaries, pensions, etc.

    Electronic Clearing Service or ECS Debit

    Electronic Clearing Service debit is used by large organisations or institutions for raising debits to a large number of customer accounts, which may include the customers of utility services, borrowers, investors, etc. This type of Electronic Clearing Service or ECS is useful for payment of bills and dues like water bill, phone bill, tax collections, installments, insurance premiums, payments towards mutual funds investments, etc. so, basically all the payments that are repetitive or periodic in nature.

    Both these types of Electronic Clearing Services or ECS have ensured easier transfer of funds for both the institution and its clients.


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