Tag: Financial Literacy

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

India Post presents Instant Money ​Order (iMO), the instant on-line money transfer service that is instant, convenient, reliable and affordable.​

iMO is an instant web-based money transfer service through Post Offices (iMO Centre) in India between two resident individuals in Indian territory. You can transfer money from INR 1,000/- to INR 50,000/- from designated iMO Post Offices. It is simple to send and receive money.

Money booked through Instant Money Order can be disbursed within 15 minutes of Booking. You can receive the payment in cash. You can also receive the payment through your post office savings bank account in the same Instant Money Order office.

Money Transfer Service Scheme is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances towards family maintenance and remittances favoring foreign tourists visiting India are permissible. No outward remittance from India is permissible under MTSS.

As a result of the collaboration of the Department of Posts, Government of India with the Western Union Financial Services, a state-of-the-art International Money transfer Service is now available through the Post Offices in India, which enables instantaneous remittance of money from around 195 countries and territories to India. The recipients can in fact collect the money in minutes after the sender has made the remittance.

The service is targeted to particularly fulfill the needs of NRI dependent families in India, visiting international tourists and foreign students studying in India.

The relationship began in 2001. Since then the two have offered money transfer services to a cross-section of customers and grown to 4200 agent locations throughout India including remote areas like Ladhak and Leh.

“Our successful relationship with India Post is of great significance as it has helped us build closer ties with our customers in India. We further intend to leverage the vast network of India Post to reach out to more people who require fast and secure money transfer service,” says Kapur, Western Union.

Noorjahan, Chief Post Master General, Maharashtra, India Post adds, “Our relationship with Western Union has given us the opportunity to provide our customers with an expanded array of services. Through Western Union, our customers in the remotest parts of the country can now receive money from almost any part of the world in a few minutes.” During the year April 2003 to December 2003, India Post paid out Rs 20 crore as remittances through their tie-up with Western Union.

Apart from communicating with Indians, the objective of the road shows is to generate and sustain visibility and communicate brand values. Both India Post and Western Union also conducted a similar road show in UK and US to talk to the Indian communities there.

To avail of this Service, a remitter goes to any one of the Western Union locations in the countries in which the Service operates , fills up a form to send the amount and pays principal amount and charges. The sender gets a unique Money Transfer Control Number / Reference Number on a receipt after the transaction is sent through the system. Thereafter, the sender calls up his/her payee and gives information on the money sent. The Payee / Receiver goes to the Post Office fills up a form to receive money, shows valid identification and receives money along with the receipt, once the transaction is verified. This entire process is completed within ten minutes.

​​The Payee receives the full amount in Indian Rupees. There is a maximum limit of 2500 USD that can be sent at a time as per applicable RBI regulations which must however be only for personal use.

Amounts up to INR. 50,000/- may be paid to the beneficiary in cash. Any amount exceeding this limit shall be paid by means of account payee Cheque or credited directly to the Savings Account standing in the Post Office in the name of the beneficiary. However, in case of foreign tourists, higher amounts can be payable in cash.

Only 30 transactions can be received by a single beneficiary in a calendar year.

The Post Offices have been directed to treat the payee as “Most Favoured Customers”, which ensures courteous and efficient service to them.

Under the KYC / AML / CFT guidelines issued by the RBI to prevent the system of cross border inward money transfer into India to be used by criminal elements for money laundering or terrorist financing activities, beneficiaries / recipients of the money transfers need to provide sufficient information necessary to establish their identity and proof of residence through reliable Govt issued documents like:

• Election Card
• Driving License
• PAN Card
• Ration Card
• Aadhar Card etc copy of which also has to be provided to the Post Office for receiving a transfer.

Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash office.

Different wire transfer systems and operators provide a variety of options relative to the immediacy and finality of settlement and the cost, value, and volume of transactions. Central bank wire transfer systems, such as the Federal Reserve’s Fedwire system in the United States, are more likely to be real-time gross settlement (RTGS) systems, as they provide the quickest availability of funds. This is because they post the gross (complete) entry against electronic accounts of the wire transfer system operator. Other systems, such as the Clearing House Interbank Payments System (CHIPS), provide net settlement on a periodic basis. More immediate settlement systems tend to process higher monetary value time-critical transactions, have higher transaction costs, and have a smaller volume of payments. A faster settlement process allows less time for currency fluctuations while money is in transit.

Most international transfers are executed through SWIFT, a co-operative society founded in 1974 by seven international banks, which operate a global network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for the transfer of funds between financial institutions. SWIFT’s headquarters are in La Hulpe, on the outskirts of Brussels, Belgium.

SWIFT also acts as a United Nations–sanctioned international standards body for the creation and maintenance of financial-messaging standards. See SWIFT Standards.

Each financial institution is assigned an ISO 9362 code, also called a Bank Identifier Code (BIC) or SWIFT Code. These codes are generally eight characters long. For example: Deutsche Bank is an international bank with its head office in Frankfurt, Germany, the SWIFT Code for which is DEUTDEFF:

• DEUT identifies Deutsche Bank.
• DE is the country code for Germany.
• FF is the code for Frankfurt.

Using an extended code of 11 digits (if the receiving bank has assigned extended codes to branches or to processing areas) allows the payment to be directed to a specific office. For example: DEUTDEFF500 would direct the payment to an office of Deutsche Bank in Bad Homburg. SWIFT deviates slightly from the standard, though, by using position nine for a Logical Terminal ID, making its extended codes 12 digits long.

European banks making transfers within the European Union and within Switzerland also use the International Bank Account Number, or IBAN.

SWIFT Transaction

SWIFT is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.

SWIFT assigns each financial organization a unique code that has either eight characters or 11 characters. The code is interchangeably called the bank identifier code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code. To understand how the code is assigned, let’s look at Italian bank UniCredit Banca, headquartered in Milan. It has the 8-character SWIFT code UNCRITMM.

• First four characters: the institute code (UNCR for UniCredit Banca)
• Next two characters: the country code (IT for the country Italy)
• Next two characters: the location/city code (MM for Milan)
• Last three characters: optional, but organizations use it to assign codes to individual branches.

Process

To avail of this Service, a remitter goes to any one of the Western Union locations in the countries in which the Service operates, fills up a form to send the amount and pays principal amount and charges. The sender gets a unique Money Transfer Control Number / Reference Number on a receipt after the transaction is sent through the system. Thereafter, the sender calls up his/her payee and gives information on the money sent. The Payee / Receiver goes to the Post Office fills up a form to receive money, shows valid identification and receives money along with the receipt, once the transaction is verified. This entire process is completed within ten minutes.

​​The Payee receives the full amount in Indian Rupees. There is a maximum limit of 2500 USD that can be sent at a time as per applicable RBI regulations which must however be only for personal use.

Amounts up to INR. 50,000/- may be paid to the beneficiary in cash. Any amount exceeding this limit shall be paid by means of account payee Cheque or credited directly to the Savings Account standing in the Post Office in the name of the beneficiary. However, in case of foreign tourists, higher amounts can be payable in cash.

Only 30 transactions can be received by a single beneficiary in a calendar year.

The Post Offices have been directed to treat the payee as “Most Favoured Customers”, which ensures courteous and efficient service to them.

Under the KYC / AML / CFT guidelines issued by the RBI to prevent the system of cross border inward money transfer into India to be used by criminal elements for money laundering or terrorist financing activities, beneficiaries / recipients of the money transfers need to provide sufficient information necessary to establish their identity and proof of residence through reliable Govt issued documents like:

• Election Card
• Driving License
• PAN Card
• Ration Card
• Aadhar Card etc copy of which also has to be provided to the Post Office for receiving a transfer.

​This International Money Transfer Service is safe, legal, fast & reliable. Also, it is approved by the Reserve Bank of India and is being provided by a Department of the Government of India i.e. the Department of Posts.​​