Taking a home loan or a personal loan requires you to make EMI payments every month without fail. And since we all have busy lives and hectic schedules we often find it challenging to remember the EMI date. Missing an EMI date often leads to a penalty and regular late payments can even affect your credit score. Sounds daunting? Well, it doesn’t have to be. To avoid penalties, the borrowers are offered Electronic Clearing Service (ECS) by banks to ensure timely payments. In this article, we will learn more about Electronic Clearing Service (ECS) and its working process in detail.
Electronic clearing service or ECS is a service provided by banks that allow the electronic transfer of funds from one bank to another. It is generally used to make bulk payments including salary, dividends, payments, pension, etc. ECS is also commonly used for making payments to utility companies such as water, telephone, and electricity. Additionally, it can be used to make loan payments as well as SIP investments.
ECS is quite beneficial for you if you have taken a loan or have to make regular loan payments. It takes out the stress of keeping track of billing dates by automatically debiting the amount from your account saving you the hassle of remembering.
Electronic clearing service (ECS) is mainly of two types based on the mode of payment:
When any organization or institution credits money to your account on a monthly basis, be it salary, pension, dividend, etc., it is called an ECS credit. Through ECS credit, institutions can afford to credit a large number of beneficiaries with bank branches in different locations.
When a fixed recurring amount is deducted from your account towards loan payments, utility bills, EMIs, insurance premiums, mutual fund investments, or digital subscription plans, it’s known as ECS debit. ECS debit is highly convenient for users as it not only saves time but also reduces effort.
The first step to avail of the Electronic Clearing Service (ECS) is to inform your bank and provide a mandate to authorize the institution, which can then credit or debit the amount from your bank account. The mandate will contain the necessary details of your bank branch and account particulars. The institution is responsible for communicating the details of the amount being credited or debited along with the transfer dates. The mobile alerts or messages from the bank will keep you notified of the payment. For added security, as an ECS user, you can also set the maximum amount that one can debit from your account.
Electronic Clearing Services (ECS) provides benefits to banks, institutions, and customers equally. Let us take a look at a few major advantages:
Electronic clearing service (ECS) has made paying bills offline or manually a thing of the past. It has revolutionized the way we make payments and made it easier for users to make recurring and pre-payments. Using ECS can help you lead a more productive lifestyle as it doesn’t require you to write cheques or visit banks every month. With ECS, missing penalties are completely avoidable as the payments are automatically deducted.
This low-risk, high-benefit service is a boon to customers, institutions, and banks equally. Discontinuing ECS service is as easy as starting it and can be done anytime you feel the need. The Electronic Clearing System (ECS) is your way to a convenient, flexible, and secure payment system.
Take the first step to home ownership with HomeCapital, get eligibility and in-principal sanction letter in one minute.
Click to get started.