What are the ECS Types & Its Charges?

What is ECS?

ECS is an abbreviation for Electronic Clearance Service. Banks provide ECS, or Electronic Clearing Service, to automate monthly transactions. It allows for the automatic transfer of funds from one bank account to another on a predetermined date. It is mainly used to make fixed payments such as interest, salary, pension, EMI, or utility bills. ECS is valid for those who have taken out a loan or have recurring monthly payments on credit cards. They can set up a monthly deduction with the ECS mandate and won't have to remember the exact payment date. In banking, ECS stands for Electronic Clearing Service.

Loan lenders typically use it to debit the borrower's EMIs regularly. Under NPCI, ECS debits are handled by the NACH (National Automated Clearing House) (National Payments Corporation of India). You must submit a cancelled cheque and a signed ECS mandate along with your KYC documents when applying for a Bajaj Finserv EMI Network Card.

Types of ECS:

ECS is classified into two types based on the mode of transfer:

  • ECS Credit: This is when any institution or organisation credits money to your account each month, whether it's a salary, pension, or dividend.
  • ECS Debit: This is when a specific amount is automatically deducted from your account instead of loans, EMI, credit card bills, utility bills, or any digital subscription plans. ECS debit saves time and effort while also being extremely convenient.

The RBI has further subdivided ECS based on the geographic location of bank branches as follows:

  • Local ECS: It operates in 81 locations across India.
  • Regional ECS: There are only 9 centres in the country.
  • National ECS: This is the centralised ECS based in Mumbai.

Charges for ECS

According to RBI guidelines, customers are not charged a fee in ECS transactions. However, there is a small fee for different banks. Each transaction requires the originating bank (the bank from which the amount is deducted) to pay Rs. 0.25 to the clearing house and Rs. 0.50 to the destination bank. Banks do not charge customers any additional ECS fees.

How Does ECS work?

The ECS mandate form, which authorises the bank to deduct a specific amount each month from your bank account, is something the bank asks you to sign when you apply for a loan or credit card. The ECS mandate also mentions the debit timeline. Additionally, the customer can renounce the mandate and end ECS anytime. An ECS mandate permits and authorises the clearing house and the bank to make a specific monthly deduction on a predetermined date.

How Do I Stop my ECS?

ECS offers great flexibility and can be cancelled anytime for any reason. Before you terminate ECS, you must notify the bank and the payment beneficiary in advance via a written application. The application must be received at least one week before the EMI debit date. A specific ECS cancellation form must be completed and submitted to the bank. Check your bank transaction details to ensure that the ECS mandate has not been cancelled after the specified time.


Long lines outside collection centres are avoided with ECH. ECS is preferred because the RBI has deregulated the ECS charges levied by sponsor banks on user institutes. Beneficiary account holders are provided with free ECS credit by destination banks. With the ECS NACH mandate, cashless transactions will be smooth and easy to track, with better management.

Rajeev Sinha

My name is Rajeev Sinha and I am a Finance Expert & completed my Masters in Finance and Administration. I have good knowledge about different finances schemes which may help you through my content and answers on this blogging website.

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