Lakshmi-Vilas-Bank Personal-NRI Premium-Banking

FAQ on Electronic Clearing Service (ECS)

It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular investments of persons.

There are two types of ECS called ECS (Credit) and ECS (Debit). ECS (Credit) is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment.
ECS (Debit) is used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution.

Working of ECS Credit System

ECS payments can be initiated by any institution (called ECS user) who have to make bulk or repetitive payments to a number of beneficiaries. They can initiate the transactions after registering themselves with an approved clearing house. ECS users have also to obtain the consent as well as the account particulars of the beneficiary for participating in the ECS clearings.
The ECS user's bank is called as the sponsor bank under the scheme and the ECS beneficiary account holder is called the destination account holder. The destination account holder's bank or the beneficiary's bank is called the destination bank.
The beneficiaries of the regular or repetitive payments can also request the paying institution to make use of the ECS (Credit) mechanism for effecting payment.

The ECS users intending to effect payments have to submit the data in a specified format to one of the approved clearing houses. The list of the approved clearing houses or the list of centres where the ECS facility has been provided is available at
The clearing house would debit the account of the ECS user through the account of the sponsor bank on the appointed day and credit the accounts of the recipient banks, for affording onward credit to the accounts of the ultimate beneficiaries.

At present ECS facility is available at more than 60 centres and the full list is available at the web-site of RBI.
The beneficiaries need to maintain an account with one of the banks at these centres in order to avail of the benefit of ECS.

The beneficiary has to furnish a mandate giving his consent to avail of the ECS facility. He should also communicate to the ECS user the details of his bank branch and account particulars. Such authorisation form is called a mandate.

In case the information/account particulars undergo change, then he has to notify the ECS user to carryout changes in order to ensure continued benefits from the ECS user. In case the account particulars at the destination branch do not match, the destination branches would return the credit through their service branch to the clearing house.

It is the responsibility of the ECS user to communicate to the beneficiary the details of credit that is being afforded to his account, indicating the proposed date of credit, amount and the relative particulars of the payment, so that the beneficiary can match the same with the details furnished by the bank in the account statement/passbook.

  • The end beneficiary need not make frequent visits to his bank for depositing the physical paper  instruments.
  • He need not apprehend loss of instrument and fraudulent encashment.
  • The delay in realization of proceeds after receipt of paper instrument.
  • The ECS user saves on administrative machinery for printing, dispatch and reconciliation.
  • Avoids chances of loss of instruments in postal transit.
  • Avoids chances of frauds due to fraudulent access to the paper instruments and encashment.
  • Ability to make payment and ensure that the beneficiaries' account gets credited on a designated date

Banks have been advised to ensure that the pass-books/statements given to the customers reflect the particulars of the transaction provided by the ECS users. Customers can match these entries with the advice received by them from the payment institution.

No value limit on the amount of individual transactions has been prescribed under the scheme.

RBI has since deregulated Service Charges to be levied by sponsor banks. As regards Processing Charges levied by RBI and other banks managing the clearing houses, the same has been waived till March 31, 2009.

A model mandate form has been prescribed for the purpose. Payment processing by banks becomes easier once the database is prepared. SEBI has also issued guidelines to investors to furnish their account numbers in their share applications for printing the same on the interest/dividend warrants, collecting the account particulars and mandates may not pose much problem.

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.

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 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.

  • 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.
  • 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.

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.

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.

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.

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.

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..