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Electronic clearing service (ecs) mayank saxena srmsibs

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Electronic clearing service (ecs) mayank saxena srmsibs

  1. 1. ELECTRONIC CLEARING SERVICE(ECS) BY:- MAYANK SAXENA SRMS IBS 19 March 2013 Shri Ram Murti Smarak International Business School 1
  2. 2. Electronic Clearing Service (ECS): FASTEST ECS TRANSFER OF MONEY SAFEST CHEAPEST 19 March 2013 Shri Ram Murti Smarak International Business School 2
  3. 3. WHAT IS ECS? • Electronic mode of payment / receipt for 1 transactions that are repetitive and periodic in nature. • ECS is used by institutions for making bulk 2 payment of amounts towards distribution of dividend, interest, salary, pension, etc • For bulk collection of amounts towards telephone 3 / electricity / water dues, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium etc 19 March 2013 Shri Ram Murti Smarak International Business School 3
  4. 4. Example of JIVAN TYRES ECS Really helps in giving salary to Employees Shri Ram Murti Smarak International 19 March 2013 4 Business School
  5. 5. Illustration 1 Jivan Tyres Ltd. has to pay salaries to its employees Customers have accounts across different banks Can he use the ECS payment system? Yes it will make his work simpler An ECS is only an account to account payment 19 March 2013 Shri Ram Murti Smarak International Business School 5
  6. 6. Example of ANITA ECS had made my life simpler and reduced time wastage due to waiting in queues. 19 March 2013 Shri Ram Murti Smarak International Business School 6
  7. 7. Authorization of Anita Debiting her Account Request of debiting Anita’s A/C Smart Authorizes New Gen Bank New Gen Bank Bank Shri Ram Murti Smarak International 19 March 2013 7 Business School
  8. 8. ECS Requirements Payer and payee must have bank accounts in banks participating in the ECS system These banks have to be the member of the local Clearing House, to avail the ECS facility. Shri Ram Murti Smarak International 19 March 2013 8 Business School
  9. 9. Participants of ECS Payer PAYEE CLEARING HOUSE PAYERS BANK PAYEES BANK Shri Ram Murti Smarak International 19 March 2013 9 Business School
  10. 10. Variants of ECS Two variants of ECS - ECS Credit and ECS Debit ECS CREDIT ECS Credit enables Used by an In case of ECS Credit, payment of amounts institution for the initiator can be towards distribution affording credit to a the paying bank, of dividend, interest, large number of requesting a credit to salary, pension, etc., beneficiaries. the receiving bank of the user institution Shri Ram Murti Smarak International 19 March 2013 10 Business School
  11. 11. Contd…. ECS Debit Used by an institution for raising debits to a large number of accounts (for Useful for payment of In case of an ECS Debit, instance, consumers of telephone / electricity / the initiator of the utility services, borrowers, water bills, cess / tax process is the payee's investors in mutual funds collections, loan bank. etc.) maintained with installment repayments bank branches at various locations. Shri Ram Murti Smarak International 19 March 2013 11 Business School
  12. 12. Advantages of ECS The end beneficiary does not need to make frequent visits to the bank for depositing the physical papers. There is no risk of loss or fraud for the beneficiary. The delay in realization of proceeds after receipt of paper is avoided. Its trouble free as it eliminates the need to go to the collection centers or banks by the customers. Provides peace of mind to the customers Shri Ram Murti Smarak International 19 March 2013 12 Business School
  13. 13. Categories of ECS Schemes Local ECS • Operating at 81 centres / locations across the country Regional ECS • Operating at 9 centres / locations at various parts of the country. National ECS • Centralized version of ECS Credit which was launched in October 2008. Shri Ram Murti Smarak International 19 March 2013 13 Business School
  14. 14. Advantages of the ECS Credit Scheme to the beneficiary The The Cost Effective 3 1 2 beneficiary beneficiary need not visit need not be his / her bank apprehensive for depositing of loss / theft the paper of physical instruments instruments Shri Ram Murti Smarak International 19 March 2013 14 Business School
  15. 15. Advantages of ECS Debit Scheme to the customers? ECS Debit mandates will take care of automatic debit to customer accounts on the due dates without customers having to visit bank branches Customers need not keep track of due date for payments Cost effective. The debits to customer accounts would be monitored by the ECS Users, and the customers alerted accordingly. Shri Ram Murti Smarak International 19 March 2013 15 Business School
  16. 16. Processing / service charges levied under ECS Credit and Debit • With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise per transaction to the COST Clearing house and destination EFFECTIVE bank respectively. Shri Ram Murti Smarak International 19 March 2013 16 Business School
  17. 17. QUIZ • Is ECS Applicable in the case of different bank accounts in different banks. a) Yes b) No c) Cant say • What are the variants of ECS Ans • Who is the initiator in the case of ECS Debit a) Payees bank b)Receiving bank c) Sponsor bank Shri Ram Murti Smarak International 19 March 2013 17 Business School
  18. 18. • Who is the initiator in the case of ECS Credit a) Payees bank b)Receiving bank c) Sponsor bank • Amount paid by the originating bank to clearing house is? a) 25 paise per transaction b) 30 paise per transaction c) 35 paise per transaction • Is is necessary for the banks to be the member of the local Clearing House, to avail the ECS facility. a) Yes b) No c) Cant say d) depend on the banks Shri Ram Murti Smarak International 19 March 2013 18 Business School
  19. 19. Shri Ram Murti Smarak International 19 March 2013 19 Business School

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