When you take any kind of loan from any bank, then you are filled with a form named ECS Mandate. While filling this form, many people do not pay attention to why this form is being filled. Or what is ECS Mandate meaning? In this article, we will know what is ECS? What is ECS Mandate? And what is NACH?
What is ECS? | ECS Full Form
ECS Meaning in Hindi The full name of ECS is Electronic Clearing Service. This is a process used during fund transfer in banking service. This is a computer based facility in which the facility of fund transfer between bank accounts is available with the help of Regional Clearing House . These clearing houses are such centers set up by the RBI where the liabilities of each other are settled between the banks. Therefore, it is used in such transactions in which many people need to make repeated payments at the same time.
Understand ECS in easy language (ECS in Hindi), then when you take a loan, the installment is deducted from your account on a fixed date every month. In this process, you do not make any transfer, yet money is deducted from your account. Because you fill the ECS Mandate form while taking the loan, in which you yourself give permission that you can deduct so much money from your account every month in another account.
Now the account in which the money is going is only one account but it has given loan to many people. In this way, he has to deduct a lot of money every month from different accounts. All this is a very complicated work and even a slight mistake in it can cause a lot of damage. Therefore, an automatic system is used in it. The information which is fed every month or on the due date deducts the installment from the account and transfers it to the account from which the loan is taken. This system itself is called ECS.
ECS is used in two ways
When companies or institutions make payments from their accounts to multiple accounts at once, it is called ECS Credit. As companies give salary, money is automatically transferred to many accounts in a single day. Similarly, banks automatically send interest to their customers at every fixed time, pension comes to their account. All this happens because of the ECS credit system.
When money is deducted from multiple accounts and taken in one account, it is called ECS Debit. Like a bank gave loan to 1000 people. If they take the loan installment on the 5th, then on the 5th of every month, the loan installment will be automatically deducted from the bank account of those 1000 people. This work will be done through ECS Debit system. You can also do this for making electricity bills, telephone bills, investments.
What is ECS Mandate? | ECS Mandate in hindi
We all definitely fill this form while taking a loan. It is very important to know about this form because due to this one form, money is deducted from your account every month on the due date. This is a kind of order letter in which you authorize your bank to deduct money from your account. In this, you have to give your bank account details and consent to the deduction of money. You also have to tell how much money will be deducted from your account.
What is NACH? NACH full form
The full form of NACH is “National Automatic Clearing House”. This is the modern form of ECS. It is operated by the National Payments Corporation of India (NPCI) instead of the Regional Clearing House of RBI. At present, all the banks of the country have joined NACH and from there now ECS has been removed. It is operated with the help of internet. That is, you can operate it sitting in any corner of the country. It is much faster and more convenient than ECS.
What are the uses of NACH? | Use of NACH
NACH is also used like ECS. Meaning when you have to send money to multiple accounts at once or if you want to take money from multiple accounts simultaneously in your account, then you use NACH. It is used more nowadays for sending salary, sending dividend, sending interest, depositing electricity bill, depositing insurance premium , paying SIP. NACH is being used for regular payment of most of the work which is being done online.
What is NACH Mandate? | What is NACH Mandate?
To deduct money from your account, you have to give consent for Auto Instruction of Debit. This is called NACH Mandate. Like you deposited LIC premium through your net banking or banking app. Now if you want that every month it is automatically cut on the fixed date, then you have to allow NACH Mandate in your net banking or app for that. So that every month a fixed amount can be deducted from your account and transferred to another account.
ECS is an old process which was earlier completed through papers. That means you took a loan. So to deduct the installment, you will have to fill the ECS Mandate form. Then it will be sent to the bank and then your work will be done. Whereas in NACH everything becomes online. You can buy anything online and can also give NACH mandate for its EMI. In NACH, all the work is done without going to the bank without any paper. This is the reason why NACH is being used more than ECS nowadays.