ECS

Electronics Clearing ServicesECS


• Objectives• At the end of the session the Students should

be able to:• Define what is ECS (Credits) ECS (Debits)• Explain the procedure of ECS• List the Advantages of ECS systems

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Electronics Clearing Services ECSECS Credit Structure

ECS user /Institution

Sponsor Bank

RBI/Nodal Clearing House

SBI BangaloreBeneficiary Bk

Branch at megistic

Branch at MG Raod

Can Bank Hyderabad

Branch at Labbipet

Branch at somajiguda

Synd Bank Mumbai

Branch at Fort Branch at VT

AT Dif cities RBI


• What is 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.

Bulk transfers from one account to many accounts (ECS Credits).

Collection of amounts from many accounts to one account. (ECS Debits).

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• Types of ECS • ECS (Credit) Dividend, Pension, • Interest , Salary

payment,• Sponsor Bank, Beneficiary Bank ECS (Debits) House tax, Water tax• Telephone, Electricity

Electronics Clearing ServicesECS Who can initiate an ECS (Credit) transaction?

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

Consent of beneficiary is required, and Account details have to be obtained

Electronics Clearing ServicesECS Can the Account Details be Changed? YES Who will communicate the beneficiaries' about the

credit? It is the responsibility of the ECS user to communicate to

the beneficiary the details of credit that is being afforded to his account,

What are the advantages to the ultimate beneficiary? No depositing the physical paper instruments. No risk of loss of instrument and fraudulent encashment. No delay in realisation of proceeds.

Electronics Clearing ServicesECS How does the ECS Credit system work?

The ECS users intending to effect payments have to submit the data in a specified format to one of the approved clearing houses.

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 onward credit to the accounts of the ultimate beneficiaries.

Electronics Clearing ServicesECS• At which of the centres ECS facility is available?• At present ECS facility is available at more than 60

centres. The beneficiaries need to maintain an account with one of the banks at these centres in order to avail of the benefit of ECS.

• How does a beneficiary participate in ECS (Credit ) scheme?

• 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.


• How does the scheme benefit the ECS user-like corporate bodies/ institutions?

• Saves on administrative machinery for printing, dispatch and reconciliation.

• No loss of instruments in postal transit.• Avoids fraudulent encashment.• Ensuring credit on the designated date to beneficiaries'

account.


• What are the advantages to the banks? • Get freed of paper handling.• Paper handling also creates lot of pressure on banks

as they have to encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers.

• In ECS banks simply get the payment particulars relating to their customers. All they need to do is to match the account particulars like name, a/c number and credit the proceeds

• Wherever the details do not match, they have to return it back, as per the procedure


• Is there any limit on the amount of Individual transactions?

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

• Who can Avail this Facility?• Any ECS (Debit)user desirous of participating in the

scheme has to register with an approved clearing house and submit the data in specified form through the sponsor bank to the clearing house. Banks will treat the electronic instructions received through the clearing system on par with the physical cheques.

Electronics Clearing ServicesECS• What are the advantages to the ultimate

beneficiary?• No need going to the collection centres/banks • No need to stand in long ‘Q’s for payment • No tracking down of payments by last dates. • The debits would be monitored by the ECS users• How can the customer track-down these

payments?• Pass-books/statements given to the customers

reflect the particulars of the transaction. Customers can match these entries with the advice received by them from the payment institution.


How does the scheme benefit the ECS user-like corporate bodies/ institutions?

Saves on administrative machinery for collecting the cheques, monitoring their realisation 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.


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

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.

What is the current coverage of the scheme? At present the scheme is in operation at 15 RBI centres (ie

centres 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.


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

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.

Electronics Clearing ServicesECS What are the Processing charges/Service

charges on individual transactions (ECS Debit) Is there any ceiling on the amount What is the current coverage of the scheme ECS

(credits), ECS (Debits)? Who has introduced this ECS Scheme EFT is a result of Which committee report? Home work

ECS PROCESS CYCLE• Day-0• 1.Submission of encrypted Input Tape/Floppy fully validated by NCC earlier with a mandate from the Sponsor Bank in the morning. • 2.Processing at NCC- Generating out put data in magnetic media and their encryption for onward transmission to Destination banks

ECS PROCESS CYCLE 3. NCC making available out put data in magnetic media duly encrypted to Destination Banks in the morning hours along with MICR Clearing Reports 4. Destination Banks (Service Branches) generating the clearing reports from the output tape/floppy supplied by NCC

after decrypting the same.

ECS PROCESS CYCLE 5. Service Branches of Destination Banks ensuring accounting of the transactions either centrally or at the destination branches either by giving soft copy of the transaction details or delivering the hard copy of the Destination Branch Reports and Destination Ledger Reports

(in duplicate) to the respective branches.

ECS PROCESS CYCLE 6. NCC making available Sponsor Bank Settlement Report to the Sponsor Bank. Day-1 1. Sponsor Bank’s account debited and

Destination Banks’ accounts credited at Deposit Accounts Department of RBI

ECS PROCESS CYCLE 2. Destination Bank branches crediting the accounts of the beneficiaries (i.e. the Destination Account Holders) and Sponsor Bank debiting the account of the User. 3. Destination Bank branches reporting the un credited items to the Service Branch

on the duplicate of the Destination Ledger Reports.

ECS PROCESS CYCLE• 4. Service Branches of Destination Banks preparing floppy file for reporting to NCC, the particulars of credited /un credited items, preparing two hard copies of the Destination Banks Final Report in Form Appendix XVII and submitting the output tape/floppy to the NCC together with the return memos and a hard copy of the Destination Bank Final Report to the NCC-while presenting the day’s MICR instruments for clearing.

ECS PROCESS CYCLE 5. NCC to arrive at the settlement based on the tapes/floppies received from all the Destination Banks. 6. NCC to generate all the relevant reports 7. Destination Bank’s accounts debited and consolidated credit given to Sponsor Bank for un credited items.

ECS PROCESS CYCLE 8. NCC to supply clearing reports-

i) Sponsor Bank Final Report ----- To Sponsor Bank ii) Combined list of un credited

item-------- iii) Two copies of the final output tape/floppy ----- iv) Destination Bank Final Report--------

ECS debit PROCESS CYCLE DAY-0 1. Submission of encrypted Input

Tape/Floppy fully validated by the CH earlier with a mandate from the Sponsor Bank in the morning.

2. Processing and generating output data at the CH in magnetic media and their encryption, for onward transmission to Destination Banks

ECS debit PROCESS CYCLE 3. The CH making available output data in

magnetic media duly encrypted to Destination banks with MICR Clearing Reports.

4. Destination Banks (Service branches) generating the clearing reports from the User Status File/floppy supplied by the CH, after decrypting the same.

ECS debit PROCESS CYCLE 5. Service branches of Destination Banks

delivering the hard copy of the Destination Branch Reports and Destination Ledger Reports (in duplicate) or the same in electronic form to the respective branches.

6. The CH making available Sponsor Bank settlement Report to the Sponsor Bank.

ECS debit PROCESS CYCLE DAY-1 1.Destination banks' accounts debited and Sponsor Bank's account credited at Deposit Accounts Department of RBI/ the Settlement Bank. 2.Destination bank branches debiting the accounts

of the beneficiaries (i.e. the Destination Account Holders) and Sponsor Bank crediting the account

of the User 3.Destination Bank Branches reporting the un

debited items to the Service branch on the duplicate

copy of the Destination Ledger Reports.

ECS debit PROCESS CYCLE 4. Service branches of Destination Banks preparing floppy file for reporting to the CH the particulars of the debited/un debited

items, preparing two hard copies of the Destination Banks Final report in the From Appendix XVII and submitting the User Status File/floppy to the CH together with the return memos and a hard copy of the Destination Bank final report to the CH - while presenting the day's MICR instruments for clearing

ECS debit PROCESS CYCLE 5. The CH to arrive at the settlement, based on the tapes/floppies received from all the Destination Banks; and generate all the relevant reports. 6. Destination Bank's accounts credited & consolidated debit given to Sponsor Bank for un debited items.

ECS debit PROCESS CYCLE 7. The CH to supply clearing reports i) Sponsor Bank Final Report- To Sponsor Bank ii) Combined list of un debited item- do - iii) Two Copies of the final User Status File/ - do – floppy (one to be forwarded to User) iv) Destination Bank Final Report- To Destination Bank

ECS

Documents

Transcript of ECS