Month: January 2022

The Electronic Clearance Service (ECS) scheme provides an alternative method of effecting bulk payment transactions like periodic (monthly/ quarterly/ half-yearly/ yearly) payments of interest/ salary/ pension/ commission/ dividend/ refund by Banks/Companies /Corporations /Government Departments. The transactions under this scheme move from a single User source (i.e. Banks/Companies /Corporations /Government Departments) to a large number of Destination Account Holders (Customers/Investors).

Electronic Clearing System (ECS) is an electronic method of fund transfer from one bank account to another. It is generally used for bulk transfers performed by institutions for making payments like dividend, interest, salary, pension, etc. ECS can also be used to pay bills and other charges such as payments to utility companies such as telephone, electricity, water, or for making equated monthly instalments payments on loans as well as SIP investments.

This scheme obviates the need for issuing and handling paper instruments and thereby facilitates improved customer service by the Banks and Companies/Corporations/Government Departments effecting bulk payments.

The Scheme is in operation at 15 centers where Reserve Bank of India manages Clearing Houses, 21 centers where SBI is managing ECS on behalf of RBI and 29 other centers where PNB and other banks are managing ECS on behalf of RBI.

The ECS is being offered in the Department of Posts in connection with payment of monthly interest under “Monthly Income Scheme” (MIS). The Department of Posts introduced ECS scheme on a pilot basis in Mumbai City on 9th August 2003. Under ECS, the depositors have the facility of getting MIS interest automatically transferred and credited into their SB account on the due dates at the designated Bank of their choice. Currently, the service is available in the Department of Posts at 15 RBI locations and 21 SBI locations.

Types:

ECS can be used for both ECS credit and ECS debit.

Advantages

The benefits of ECS credit given to the clients are as follows:

• Delay in the realisation of proceeds, which used to happen in the receipt of the paper instrument, is eliminated.
• The end beneficiary need not make frequent visit to his bank for depositing the physical paper instruments.
• The ECS user helps to save on administrative machinery for printing, dispatch and reconciliation.
• Provides the ability to make payment and ensure that the beneficiaries account gets credited on a designated date.

The benefits of ECS debit given to the clients are as follows:

• Easy to track: Customers are not required to track down payments by last dates. The ECS users would monitor the debts. The ECS user saves on administrative machinery for collecting the cheques by monitoring their realisation and reconciliation.
• Trouble-free: Eliminates the need to go to the collection centres or banks and the need to stand in long queues for payment.
• The realisation of payments on a single date is enabled instead of fractured receipt of payments.
• Better cash management: Chances of frauds due to fraudulent access to paper instruments and encashment are avoided.

India Post Payments Bank (IPPB) is a division of Indian Post which is under the ownership of the Department of Post a department under Ministry of Communications of the Government of India. Opened in 2018, the bank had acquired about 4.0 crore customers by December 2020.

On 19 August 2015, the India Post received licence to run a payments bank from the Reserve Bank of India. On 17 August 2016, it was registered as a public limited government company for setting up a payments bank. IPPB is operating with the Department of Posts under Ministry of Communications.

The pilot project of IPPB was inaugurated on 30 January 2017 at Raipur and Ranchi. In August 2018, the Union Cabinet approved a cost of ₹1,435 crore (US$190 million) for setting up the bank. The first phase of the bank with 650 branches and 3,250 post offices as access points was inaugurated on 1 September 2018. Over ten thousand postmen have been roped into the first phase. By September 2020, the bank had acquired about 3.5 crore customers.

Merchants Benefits

• Cost-effective

No charges for downloading, registering and accepting digital payments

• Easy payment management

Use IPPB’s innovative Merchant App, which can be easily downloaded onto your smartphone

• Simple and secure

Accept digital payments from your customers

• Doorstep banking

Get cash management services at your doorstep

• Instant information

Access your account statements and reports at any time

• Track your business

Build a transaction history that enables you to create your positive credit score

• Drive a digital ecosystem

​​​​​​​Avoid hassles of managing loose cash, small change, counterfeit notes or soiled notes