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Nach ECS

When it comes to transferring funds, currently, there are plenty of methods available. A transaction could be made in a jiffy with the help of a gadget with a good internet connection. There are several available options to complete a transaction through internet banking such as NEFTRTGSIMPS, and many more. However, these transactions are carried out on web-based solutions that are used by banks. These web-based solutions facilitate transfers across banks and within the same bank. There are two main modes of electronic transfer that are carried out by banks: NACH and ECS.

ECS Mandate Types

Electronic Clearing Service (ECS) was launched by the RBI. The main reason behind launching ECS was to facilitate the bulk transfer of funds across bank accounts. In simple terms, ECS is an electronic mode of money transfer that is used for making a variety of payments such as clearing pension, distributing dividends, paying salary, distributing interest, etc. With ECS, the transfer of funds from one bank account to another bank account was made hassle-free.


Many loan providers use the ECS mandate as an important part of their practice. They use ECS to debit the monthly EMIs for loans from the bank account of the borrower. In India, National Automated Clearing House (NACH) handles all of the ECS debit processes. NACH typically works under the National Payments Corporation of India (NPCI). Besides, there are 2 main types of ECS: debit and credit.

1. ECS Credit

ECS credit is largely used to distribute funds. Typically, several big institutions made use of this facility to send credit to many of their recipients. All of the recipients will hold an active account in the same bank irrespective of the branch. Moreover, all these transactions are raised as a single debit that is made to the user institution’s bank account. For example, a company paying salary to all of its employees can describe an ECS credit activity.

2. ECS Debit

When it comes to ECS debit, it is used to collect funds from several bank accounts. It works similar to ECS credit, instead, the user institution collects funds from a number of bank accounts. For instance, investors in mutual funds or SIPs, individuals who have availed of a loan, and consumers of utility services make regular monthly payments to the same user institution account. This can also be used for the purpose of paying bills, making investments in mutual fund schemes, making EMI payments for loans, etc.

NACH Mandate Types

National Automated Clearing House (NACH) was introduced by the RBI to primarily facilitate the transfer of bulk payments by businesses, government units, corporate sector, and more. Such sectors regularly have plenty of bulky transactions that typically are for salary payments, subsidies, pension payments, and many more. So, NACH was introduced to handle such bulky payments with ease. In addition to large payments, other types of transactions such as EMIs, bills, etc. can also be made through NACH.


One of the major concerns for large payments is that overseas transactions of such payments are not easily facilitated. The process of bulky overseas transfers comes with a certain amount of hassle. However, with NACH, geographical boundaries are lifted. There are 2 main types of NACH mandates: credit and debit.

1. NACH Credit

NACH credit is very similar to that of ECS when it comes to the functionality. Nearly 10 million transactions can be engaged without any hassle during a span of 1 day.

2. NACH Debit

NACH debit is along the lines of ECS debit. It allows a large number of incoming transactions or deposits to a single account. Several financial institutions can accept payments in bulk from any third party.

Difference Between NACH and ECS Mandate

NACH (National Automated Clearing House) and ECS (Electronic Clearing Service) mandate are two widely used systems for electronic fund transfers in India. While they both serve the purpose of facilitating automated payments, there are significant differences between NACH and ECS mandates. Here’s a closer look at NACH vs ECS.

1. Scope and Applicability

The National Automated Clearing House is a centralized system that enables bulk transactions for various types of payments such as salaries, pensions, dividends, and utility bills. It is managed by the National Payments Corporation of India (NPCI) and applies to all banks and financial institutions across the country.


The Electronic Clearing Service, on the other hand, is a regional clearing system used for bulk transactions within a specific jurisdiction or circle. It is managed by the Reserve Bank of India (RBI) and is applicable only within the respective circle where it is implemented.

2. Transaction Types

NACH supports both debit and credit transactions. It allows individuals and organizations to set up electronic mandates for recurring payments such as credit card bills, utility bills, loan EMIs, insurance premiums and SIP (Systematic Investment Plan) payments. 


ECS, meanwhile, is primarily used for credit transactions, such as dividend payments, interest payments, salary payments and periodic credits. It is not typically used for debit transactions or recurring payments like NACH.

3. Transaction Timings

NACH operates on a scheduled basis, where transactions are processed in batches during specific time slots, similar to the National Electronic Fund Transfer (NEFT) payment system. The transaction timings may vary depending on the type of payment and the banks involved. NACH mandates are processed on fixed days and frequencies as specified by the payer.


ECS mandates are processed on specific dates as per the predefined payment cycles. The frequency and timing of these cycles may vary between different clearinghouses and the payment type. 

4. Geographical Coverage

The NACH system operates on a pan-India basis, covering all states and union territories. It ensures seamless electronic fund transfers across the country, making it a comprehensive solution for automated payments.


The ECS system operates on a regional basis, with different clearinghouses established in various circles across India. Each clearinghouse handles transactions within its specific jurisdiction, making ECS limited to a particular geographic area.

5. Speed

Since NACH is a more modern payment settlement system, it is much faster in almost all aspects. NACH mandates generally take only up to 10 days to set up and can be completed online within minutes from the comfort of your own home. Furthermore, NACH settlement times are also very low. It takes a maximum of up to 24 hours to settle payment requests.


ECS, however, is a much older payment settlement system and is far slower compared to NACH. It may take up to 30 days to set up an ECS mandate and can only be set up offline by filling out and submitting an ECS mandate form with your bank. Also, ECS settlements can take anywhere from 3 to 4 days to complete, making it far slower than NACH.

NACH vs ECS Comparison

The NACH and ECS difference stands out especially when it comes to dispute management and the time taken for settlement. In addition, the amount of paperwork and rejection rate also differentiate NACH from ECS. To summarize, let us have a brief look into the difference between ECS and NACH. 

National Automated Clearing House (NACH)

Electronic Clearing System (ECS)

Exceptional operating model

Poor operating model

Has an online dispute management system

Does not have a dispute management system

24 hours for settlement

3-4 days for settlement

Negligible rejection rate

High rejection rate

Less paperwork

More paperwork

FAQs About ECS vs NACH

What does NACH ECS mean?

NACH is a payment system that is operated on the lines of ECS.

How to cancel ECS Mandate or NACH Mandate?

To cancel a mandate, you can approach the user institution and withdraw the NACH ECS mandate. You can also withdraw the mandate directly from the bank without having to approach the user institution

What is the difference between ECS and NACH?

ECS and NACH have many differences. Primarily, NACH is used to facilitate inter-bank bulk transfers and has a lower number of rejects. ECS has a higher number of rejects usually stemming from mandate-related issues. 

How much paperwork is required for NACH and ECS?

When compared to ECS, NACH has less paperwork involved.

How long does it take for settlement for both NACH and ECS?

The settlement period for NACH is 24 hours whereas the settlement period for ECS is 3-4 days.

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