Electronics Clearing ServicesECS
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
Electronics Clearing ServicesECS
• 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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Electronics Clearing ServicesECS
• 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.
Electronics Clearing ServicesECS
• 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.
Electronics Clearing ServicesECS
• 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
Electronics Clearing ServicesECS
• 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.
Electronics Clearing ServicesECS
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.
Electronics Clearing ServicesECS
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.
Electronics Clearing ServicesECS
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