Ans : User institutions enjoy many benefits from the ECS Debit Scheme like,

• Savings on administrative machinery and costs of collecting the cheques from customers, presenting in clearing, monitoring their realisation and reconciliation.

• Better cash management because of realisation / recovery of dues on due dates promptly and efficiently.

• Avoids chances of loss / theft of instruments in transit, likelihood of fraudulent access to the paper instruments and encashment thereof.

• Realisation of payments on a uniform date instead of fragmented receipts spread over many days.

• Cost effective.

Ans : The banking system has many benefits from ECS Debit such as –

• Freedom from paper handling and the resultant disadvantages of handling, receiving and monitoring paper instruments presented in clearing.

• Ease of processing and return for the destination bank branches. Destination bank branches can debit the customers’ accounts after matching the account number of the customer in their database and due verification of existence of valid mandate and its particulars. With core banking systems in place and straight-through-processing, this process can be completed with minimal manual intervention.

• Smooth process of reconciliation for the sponsor banks.

• Cost effective.

Ans : Yes. In case of any need to withdraw or stop a mandate the customer can do so by approaching the user institution to withdraw the mandate. The account holder / customer can also withdraw the mandate / debit instruction directly from his / her banker without involvement of the User institution. The withdrawal instructions of a customer in such cases would be treated equivalent to a ‘stop payment’ instruction in cheque clearing system. However, as a matter of best practice, the customer may also provide prior notice or intimation of mandate withdrawal to the ECS user institution well in time, so as to ensure that the input files submitted by the user institution does not include the ECS Debit details in respect of the withdrawn / stopped mandates, leading to avoidable returns/rejections etc.

Ans : Yes. It is left to the choice of the individual customer and the ECS user to decide these aspects. The mandate can contain a ceiling on the maximum amount of debit, specify the purpose of debit and validity period of the mandate.

Ans : No. There is no value limit on the amount of individual transactions that can be collected by ECS Debit.

Ans : The Reserve Bank of India has deregulated the charges to be levied by sponsor banks from user institutions. The sponsor banks are, however, required to disclose the charges in a transparent manner. With effect from 1st July 2011, originating banks are required to pay a nominal charge of 25 paise and 50 paise per transaction to the Clearing house and destination bank respectively. Bank branches do not generally levy processing / service charges for debiting the accounts of customers maintained with them.