What is Electronic Clearing Service (ECS)?

By Pradeep Yuvaraj | March 15, 2011

Electronic Clearing Service (ECS) is an electronic mode of payment for transactions that are periodic and repetitive in nature. This makes the transactions of banks cost effective, smoother and easier.

The person/ institution availing this facility has to furnish an authorization to the bank giving consent to avail the ECS Credit facility with details of the amount, accounts involved, date etc.

ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, /tax collections, loan installment repayments, periodic investments in mutual funds, etc. This saves administrative machinery and costs of printing, dispatching paper which would be required otherwise. ECS also ensures cost effective and timely payments.

In case of individuals utilizing this facility, they are freed from the trouble visiting bank and using other instruments transaction every time the payment is done. The trouble of physical delivery of cash or other instruments of transaction is removed cost effectively. The automatic transfer removes the fear of forgetting of periodic payments also. So for example, a person who has having home loan, mutual funds, insurance policies, etc. as periodic payment, an ECS payment simplifies life.

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Pradeep Yuvaraj

About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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