ECS Mandate Charges

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About ECS Mandate Charges

Electronic Clearing Service (ECS) is an electronic mode of fund transfer initiated by the RBI. It facilitates bulk funds transfer from one bank account to another. ECSs are repetitive and periodic transactions done by institutions to make payments towards interest, pension, salary, and distribution of dividend.

It is usually used by loan lenders to periodically debit EMIs from the borrower. ECS debits are handled by the NACH (National Automated Clearing House) under NPCI (National Payments Corporation of India).

Today, we’re going to look at the working of ECS mandates, the ease of applying for these mandates, ECS mandate reg charges and ECS mandate chg. Along with this, ECS mandate charges applied by different banks and withdrawal procedure is explained below.

How Does ECS Mandate Work?

When you want to avail ECS, you have to sign an ECS mandate. This mandate is a proof that instructs your bank to undertake these tasks:

  • This mandate informs your bank and authorises it to credit or debit a certain amount of money as monthly EMI for your loan or any purchases and credit in your lenders account periodically.

  • The mandate contains details of your bank account, branch, and other mandatory account details.

  • While applying for this mandate, you should clearly specify the purpose of debit, maximum amount the bank should debit, and set a validity period.

  • Every time the bank debts the amount, you will be notified about the completion of the transaction along with relevant details of your transaction.

There are two types of ECS mandate:

  • ECS credit:

ECS credit is when an institution credits funds in your account. It enables payment of salary distribution, pension distribution, and dividend payments. You do not have to deal with loss of physical instruments or fraud encashments and receive funds on the due date.

  • ECS debit:

ECS debit is when you choose to make recurring payments like EMIs or SIP towards your investments. You can timely pay credit card bills, loan instalments, and mutual funds.

ECS Mandate Charges

Your ECS NACH charges depend on the NACH mandate. Transactions made by ECS mandate involve no charges as per RBI’s directive. As per the directive, ECS mandate charges cannot be levied by sponsor or beneficiary banks on the customers.

ECS mandate charges that might be applied are mentioned below:

  • ECS mandate charges might be levied on participating banks

  • Banks from where the amount is getting debited need to pay a charge of 25 paise to clearing house and 50 paise to the destination bank per transaction.

  • Bank branches usually do not apply ECS mandate charges for debiting funds from the customers accounts. Banks do not levy ECS mandate charges while registering for it, but can charge you for ECS sign verification charges.

  • ECS sign verification charges are available on financial institute’s websites under service charges.

Sponsor banks are required to disclose all the levied charges in a transparent manner for ECS mandate charges under ECS credit and debit.

ECS Mandate Charges for Different Banks

ECS NACH mandate charges vary in different banks. Along with ECS sign verification charges, not having adequate balance will be chargeable. Additional charges will be levied if your ECS transactions fail due to low account balance. ECS mandate charges of some banks are mentioned below:

Name of Bank

ECS Outward

ECS Inward

State Bank of India

NIL for account holders.

As a sponsor bank, ECS mandate charges would be Rs. 7.00 per entry.

(Minimum Rs. 2750/-)

(ECS Credit)

NIL for account holders.

As a sponsor bank, ECS mandate charges would be Rs. 3.50 per entry

(Minimum Rs. 1400/-)

(ECS Debit)

Axis Bank

ECS mandate charges being collected from ECS users as sponsor bank: Rs. 1/- per record subject to minimum Rs. 300/- per file plus service tax.

 

Charges/penalties levied by destination branches for ECS (debit) returns due to non-availability of funds in customer account: Rs. 200/- per record plus service tax for inward ECS (debit) returns.

 

Charges for certifying customer mandates: Rs. 50 per mandate plus service tax

Nil

Citi Bank

 

(for corporate and other institutional customers - No charges are currently levied for retail customers)

Rs. 4/-

Rs. 4/-

For more details on ECS mandate charges, contact your bank.

Can ECS Mandate be Stopped?

The transactions and ECS NACH mandate charges can be stopped. Your instructions under ECS mandate charges will be treated equivalent to ‘stop payment’ similar to the cheque clearing system.

You can approach your bank or other institution to whom you have authorised the ECS mandate to withdraw the transaction process and along with it ECS mandate charges by the following procedure:

  • ECS mandate charges and it’s process can be withdrawn by informing your bank and the beneficiary of the payment in a written application.

  • You may provide prior notice of the mandate withdrawal to the user institution.

  • You can also withdraw the mandate directly with your bank, without the involvement of the user institution.

  • Before withdrawing the mandate, you should monitor your payments

Conclusion

With ECH, long queues outside collection centres are avoided. ECS is preferred as RBI has deregulated ECS charges to be levied by sponsor banks from user institutes. Destination banks take care of affording ECS credit free of charge to beneficiary account holders. Cashless transactions will be smooth, easy to track with better management with ECS NACH mandate.

FAQs

  • ✔️What are the fees for ECS mandate transactions?

    As per the RBI’s directive, there is no fee involved in transactions made through ECS mandate. The only applicable charges are for participating banks.

  • ✔️What are the ECS mandate charges for a bounced ECS?

    If transactions made under ECS mandate charges bounce, it is treated the same way as a cheque. If the transaction bounces due to inadequate funds in the account, there is a charge. The ECS mandate charge varies from bank to bank. If the pending ECS is not deposited, the next ECS will not be deducted.

  • ✔️Are there any charges on ECS mandate cancellation?

    ECS mandate charges and its transactions can be cancelled by informing your bank and beneficiary of the payment. For charges on ECS cancellation of the mandate, contact your bank.

  • ✔️Is there any limit on the transactions in ECS Debit?

    ECS transactions can be done without any restrictions. So, there is no value limit on the transactions in ECS Debit.

  • ✔️Can one ECS mandate be used for other banks?

    ECS mandate is bank specific. You need separate mandates for each bank you use.

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