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What is ECS Mandate?

Electronic Clearing Service(ECS) - What it is and How it Works

Remember when paying bills manually or offline was a thing? Every month, a calendar was prepared to mark the due dates of different bills, and waiting in long queues was mandatory to get the bills paid. Earlier everything was done manually, which required a lot of time and patience; since ECS Mandate was implemented this service helped bridge the gap and make the recurring payment process easier.

What is an ECS Mandate?

An ECS (Electronic Clearing Service) is an electronic method of payment used for recurring or periodic transactions. The RBI launched ECS for the convenience of bulk fund transfers from one bank account to another.

The NPCI (National Payments Corporation of India) administers the National Automated Clearing House (NACH), which manages ECS debit in India.

Companies and institutions use ECS to perform bulk payments to pay dividends, interest, salaries, pensions, etc., or collect amounts continuously, for example, telephone/electricity/water rates, tax payments, loan payments, pensions, etc.

For Example; If you take a loan, such as a personal loan or home loan, you’ll be required to pay the EMI every month. Delayed payments may result in penalties, and regular late payments can also affect the credit rating.

However, to resolve the issue, lenders in India have now introduced Electronic Clearing Service (ECS) for borrowers. With this system, lenders use a clearinghouse to debit EMIs from a customer’s account on a fixed date.

Types of an ECS Mandate

There are two types of ECS

1. ECS Credit

2. ECS Debit

ECS Credit

ECS Credit is used by an institution for affording credit to a large number of beneficiaries (for instance, employees, and investors) having accounts with bank branches at various locations of the ECS Centre to credit one single account.

The ECS Credit enables payment of amounts towards dividend distribution, interest distribution, salary distribution, pension distribution, etc.

ECS Debit

ECS Debit allows an institution to make a debit to a large number of accounts (consumers of utility services, borrowers, investors in mutual funds, etc.) maintained with bank branches at various locations of the ECS Centre to credit one single account.

So, ECS Debit is convenient for recurring payments, like telephone/electricity/water bills, cess/tax collections, loan installment repayments, periodic investments in mutual funds, insurance premiums, etc.

How does an ECS Mandate work?

When you take a loan, an ECS payment mandate is necessary. This mandate instructs the clearinghouse to debit monthly EMIs from your bank accounts and credit the funds into your loan account, or to the lender’s account on a fixed date.

The mandate will contain detailed information about your bank account, bank branch, ECS debit date, and debit amount.

How can I get a duly signed ECS Mandate?

If you wish to apply for an ECS Mandate, you must inform your bank or lending institution that permits it to deduct a certain amount for any acquisitions made.

ECS Mandates include an account number, branch address, and other account details.

ECS users can set a maximum amount that can be deducted from their accounts.

What are the advantages of an ECS?

As per the Reserve Bank of India-  Both ECS Credit and ECS Debit have many advantages to the beneficiary, Institutions, and banking system.

Advantages of ECS Credit that beneficiaries have

Beneficiaries don’t need to go to their bank to deposit the papers they would usually receive if they had not used the ECS Credit service.  A beneficiary does not need to be concerned about the loss of physical instruments or the possibility of fraudulent encashment of them. Receiving funds by ECS is a cost-effective method. Moreover, the beneficiary receives the funds on the due date.

ECS Credit Scheme benefits for user institutions

User Institutions also enjoy many advantages when beneficiaries choose ECS credit, such as saving on administrative machinery and printing; dispatching costs, and reducing their costs related to the reconciliation of paper instruments. The possibilities of instruments being lost/theft in transit, chances of fraudulent encashment of paper instruments, and the subsequent correspondence/litigation are minimized. Cost-effective means of making sure the beneficiaries get their benefits on a scheduled date.

ECS Credit benefits the banking system

Clearing payments are processed faster and easier by eliminating the handling, presenting, and monitoring of physical instruments. Payments are returned faster to the destination bank branches.

The benefits of the ECS Debit Scheme to customers

Customers will not have to visit bank branches/collection centers of utility service providers to make payments since ECS Debit mandates will take care of automatic debits on due dates without visiting banks and utility service providers. Customers’ accounts would be monitored by ECS Users, and they would be alerted accordingly.

ECS Debit Scheme benefits user institutions

The ECS Debit Scheme provides many benefits for user Institutions, including reduction of administrative overhead and saving on collection costs, monitoring and reconciliation processes. Increased cash flow since dues is recovered promptly and efficiently on due dates. It reduces the chances of instruments being stolen, lost, or fraudulently accessed, and then used. Cost-effective because payments are realized on one date rather than received on fragmented dates.

With ECS Debit, the banking system benefits from

It is no longer necessary to handle, receive, monitor, or manage paper instruments. Bank branches can deduct the customers’ accounts after confirming that the customer’s account number is in the bank’s database, as well as ensuring that there is a valid mandate, and all its particulars. This process can be completed with minimal manual intervention with the help of core banking systems and straight-through processing. Easy reconciliation procedure for sponsor banks and is Cost-effective.

How do you discontinue an ECS Scheme?

To discontinue an ECS scheme, the customer has to provide prior notice to the ECS user institution, to ensure that the input files submitted by the user discontinue to include the ECS Debit details in respect of the mandates withdrawn by customers.

There are two steps you need to follow to ensure appropriate closure.

  1. To stop the services, the service provider, which is the beneficiary of the payment, will have to be given a written communication in the way specified by them.
  2. A written request stating you want to discontinue will also need to be submitted by you to the bank.

What are ECS Mandate Charges?

The Reserve Bank of India (RBI) has deregulated the charges to be levied by sponsor banks from user institutions.  The sponsor banks are required to reveal the charges transparently.

However, the Bank branches do not generally charge processing fees for debiting the accounts of customers maintained with them.


An ECS benefits the user and also the lender, this is useful when people need to make digital periodic payments, such as if they have to pay their EMI loan, Bills, or SIP installments.

Using this service enables you to be more productive as you don’t have to write cheques every month, and this also decreases the probability of missing bill due dates.
You must take ECS very seriously since it has the same effect as a cheque issued by you. So, this means you have to make sure there are sufficient funds available in your account for your ECS to get processed. If you bounce an ECS, you will be liable just like you would for a bounced cheque.
As for the beneficiary of payments, ECS is a boon because they don’t have to remind the payer, and the payment will be received automatically due to the electronic clearing service.
It helps the customer systematically manage the debts since they have the flexibility of issuing more than one ECS and can also modify the amount of ECS therefore he can easily manage his debts.


1. What is the full form of ECS?

Ans: ECS Stands For Electronic Clearing Service.

2. What is an electronic clearing service?

Ans: Electronic Clearing Service (ECS) is an electronic mode of funds transfer from one bank account to another bank account. The customer needs to provide a mandate that authorizes the institution, to debit or credit payments to the bank account.

3. What are the advantages of the ECS Mandate?

Ans: 1. Enhances consumer satisfaction

2. No late payment charges

3. Makes timely installments of bills

4. Enables customers to make timely recurring payments of insurance premiums, credit cards, telephone/electricity bills, mutual funds, loan installments, etc.

4. How to stop ECS?

Ans:A written application needs to be submitted weeks before your EMI debit date to the loan provider in a format prescribed. The bank needs to be informed about the same by submitting a written application.

5. Do I have to give an ECS mandate for every bill payment?

Ans: ECS mandate needs to be submitted only once, this remains valid until it’s withdrawn by the customer.

6. At how many locations does the ECS scheme operate?

Ans: Based on the location of branches, there are three broad categories of ECS Schemes

  1. Local ECS
  2. Regional ECS
  3. National ECS

The schemes are either operated by RBI or by the designated commercial banks.

Local ECS

The branch coverage at the clearinghouses is usually limited to the geographic area within which the clearinghouses are located. Typically, this is one city and/or satellite town.

It is operating at 81 centers/locations across the country.

Regional ECS

RECS facilitates the coverage of all branches enabled in the core banking system in a State or a group of States and can be used by institutions that wish to reach beneficiaries in the State/group of States.

Since the system uses the core banking system in banks, the actual accounts may be held in various bank branches across the length and breadth of the State/group of States; even though the interbank settlement occurs centrally in the State. It is operating at 9 centers/locations in various parts of the country.

National ECS

NECS allows banks to add any core-banking-enabled branch to their system regardless of its location. It is the centralized version of ECS Credit, which was launched in October 2008.

This scheme is operated in Mumbai and covers all branches with core banking capabilities across the country. Similarly, this system takes advantage of core banking systems in banks. Even though the inter-bank settlement takes place at a central location in Mumbai, the actual customers under the Scheme may have their accounts at different bank branches across the country.


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