ECS Mandate means Electronic Clearing Service is a typical form of transferring funds from one bank account to another. NACH stands for National Automated Clearing Service. It is one of the best payment reforms available in India. But ECS Mandate service is also mired in confusion. If you want to know more, then you can go ahead and go through this post. You need to submit the PAN Card, Aadhaar Card, Cancelled Cheque, Duly signed ECS mandate to avail of an EMI Network Card.
What is the ECS Mandate?
Remember many financial articles telling you about how maintaining a good CIBIL score is never to miss your due payments? And to assist you to do that, it is easier to automate payment every month. Yes, one of the most cost-effective methods of doing that is automating investments with the help of ECS.
In other words, the ECS Mandate is a service that a financial institution provides to help customers to transfer funds from one bank to another. It is a payment that is hassle-free when you need to make payments periodically such as credit card, loan repayments, and more.
ECS can be used for both debit and credit purchases. The only thing that you need to ensure is that there are enough funds before your scheduled payment date.
Types of ECS Mandate
- ECS Credit
- ECS Debit
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ECS Credit:
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ECS Credit is actually a method of depositing funds electronically in your bank account by an institution. This is a digital way to get your salary, dividend, etc. from investment.
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ECS Debit:
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ECS debit actually gives you freedom from the mess of many checks etc. When you take a loan, your monthly installment goes through your bank account through ECS debit. In this, remember to transfer money on time and due to any mistake on the check, the possibility of payment failure and penalty is eliminated.
How to Set-Up ECS From Your Bank Account?
- If you also want to avail ECS payment facility from your bank account, then you must first inform your bank. Your bank will give you an ECS mandate form for this. It is through this form that you mandate ECS credit/debit to the bank.
- In this, you have to provide your bank account branch and other important information related to the account. You can give instructions about the maximum amount of ECS while filling this ECS Mandate form.
- Once the ECS Mandate service is started, whenever you get money from your bank account or any amount will come in it, you will get the information through SMS.
ECS Transactions Charges & Fees
According to banking regulator RBI, No fees have been kept for ECS Mandate. Many times banks can charge 25 paise or 50 paise per transaction according to the clearinghouse.
How can I get a Duly signed ECS Mandate?
To avail of an ECS Mandate, you need to inform your bank or lending institutions that authorizes it to deduct a certain amount for any purchases made. The ECS Mandate contains the details of your bank account, branch, and other account details. An ECS user can set a maximum amount that one can be debited from the account.
Does ECS have a Stop Payment Option?
If you want to stop any of your payments, then you can inform the bank about it. For this, the bank has to give information soon. Banks spend time in this process, according to which you should give this information in advance to the bank. You can get regular updates about this in your bank account statement.
What is NACH Mandate?
NACH stands for National Automated Clearing Service. It is one of the best payment reforms available in India. The function of the NACH Mandate is to pave the way for electronic interbank high and low volume credit and debit transactions that are intermittent in nature.
There are two types of NACH credit and NACH debit systems available in India.
What is the Advantage of NACH Mandate?
The registration time for SIP is currently 30 days, which will reduce it to 10 days. After registering this mandate, the investor will be able to make online money transfer through offline investment without a check cut or payment gateway.
Investors will be able to invest the lump sum in mutual funds through this method of payment. Also, they will also be able to SIP in the same folio of the fund house.
How to Register for NACH Mandate?
Every folio has to be registered only once. You have to fill and submit the NACH Mandate Form. The signature on this should be the same as in your bank records as this form will be sent to your bank branch. Put a check copy or canceled check with it, which will make it easier for the fund house to validate your bank account.
Required Info. to fill NACH Mandate Form
Bank Account Number, Bank Name and Branch, Contact Details. You will have to mention the lump sum or daily limit in a new column.
What is the Difference Between NACH and ECS Mandate?
If you want to know about the basic differences between NACH Mandate and ECS Mandate, then have a look:
- In ECS, the process is manual, and it takes more time and verification concerns. But NACH Mandate works as per the defined workflow. It takes less time, and the payment is almost in real-time.
- In ECS, you will not be able to get a unique mandate registration reference number. Nonetheless, in NACH, you will get it that you can use it for reference purposes.
- In ECS, the probability of rejection ratio is higher. On the other hand, NACH Mandate works wonders due to less paperwork, leading to less rejection ratio.
- In the ECS system, it takes 3-4 days for the settlement of payment. But in the case of NACH, it will be settled on the same day. It also means that it will aid your business in the best possible way.
- When it comes to the dispute management system, there is no such system in ECS. But NACH is well in place and can provide you with the resolution of issues easily.
- The registration of ECS takes around 1 month, but in the case of NACH, it takes only about 15 days.
How to Submit Your NACH Mandate Easily?
Nowadays, it is easier to submit your NACH bank mandate. You would not need to indulge in the hassle of sending a physical copy of the ECS mandate. You would only need to do – uploading a neat and uncluttered PDF or image of the mandate.
It can either be clicked on your smartphone or scanned otherwise to your banks. It will help your financial partners to process your mandates in a faster, efficient, and smoother manner.
Also, Read This: What Are All the Types of Bank Deposits?
You should also note that NACH Mandate facilitation centers will be able to accept only your clear and high-resolution PDF.
If you are looking to automate your future payments like Salaries, pensions, interests, interest payments, and more systematically, then you can rely on the NACH mandate.
It has emerged as one of the advanced payment reforms in today’s digital era and should be streamlining credit and debit payment systems in India for all.