Electronic Funds Transfer EFT - Electronic Clearing Service ECS

In the global market, the technology is becoming the driving force for bringing in the operational efficiency in banking industry. Several RBI committees on computerisation, in the recent past have recommended for adopting such technologies merged with the faster communication technology for the growth, development and profitability. Some of these electronic services in banking, which have come up recently, are described below.

Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) is a paperless remittance service across the banks, and is a major step towards an efficient payment system. EFT facilitates transfer of funds by an account holder from any bank, any branch, any centre to another account holder of same or some other branch, of same or some other bank, at the same or some other centre through electronic means. The communication network used for sending the messages from one centre to the other centre is BANKNET. Presently, this facility is available in metros and other important centres but sooner will be made available to other major cities. For the EFTs at the same centre, the remittances are effected through the Net Clear amongst the participating banks.

Electronic Clearing Service (ECS)

1. ECS Credit

The 'Electronic Clearing Service (ECS) - Credit' is another important product in pursuit of electronic substitute of cheque clearing. ECS - Credit can be used for payment of Interest Warrants, Dividend Warrants, Refund Orders, etc. The corporate clients, companies, etc., who have to make such periodic payments to a large number of beneficiaries, can submit the data for such instruments / payments on a magnetic storage media to the clearing house. The Clearing House passes on the credit instructions to the member banks where the beneficiaries maintain their accounts. Besides saving time, stationery and costs in a very big way, ECS - Credit also makes it possible to avoid the risk of these instruments being intercepted in transit and encashments by unscrupulous persons. Now many big companies, banks and financial institutions like UTI, ICICI, etc. are offering this facility to their shareholder and unit holders.

2. ECS Debit

'Electronic Clearing Service (ECS) - Debit' is similar to the above system, but is used for pre-authorised debit transactions. These are used generally for payments due for utility services to the companies or corporations, like telephone bills due to MTNL or BSNL, water charges bills due to Municipal Corporations, electricity bills to Electricity Boards, etc. The system facilitates the customers / subscribers, maintaining the account with the banks at the centres having this facility, to make prompt payments of the bills on due dates without causing delays and inconvenience to reach the collection centres in time for making such payments.