Page 101 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes

Notes The banks generally charge some processing charges for EFT just as in the case of
other services like demand drafts, pay orders, etc.

Electronic Clearing Service - Credit Transfer
Under ECS (Credit) one entity/company would make payments from its bank account to
a number of recipients by direct credit to their bank accounts. For instance, companies
make use of ECS (Credit) to make periodic dividend/interest payments to their investors.

Similarly, employers like banks, government departments, etc. make monthly salary
payments to their employees through ECS (Credit). Payments of repetitive nature to be
made to vendors can also be made through this mode. For this purpose, the company or
entity making the payment has to have the bank account details of the individual
beneficiaries. The payments are affected through a sponsor bank of the company making
the payment and such bank has to ensure that there are enough funds in its accounts on the
settlement day to offset the total amount for which the payment is being made for that
particular settlement. The sponsor bank is generally the bank with whom the company
maintains its account.
Electronic Clearing Service - Debit
ECS (Debit) is mostly used by utility companies like telephone companies, electricity
companies etc. to receive the bill payments directly from the bank account of their
customers.
Instead of making electricity bill payment through cash or by means of cheque, a consumer
(individuals as well as companies) can opt to make bill payments directly into the account
of the electricity provider/company/board from his own bank account.
For this purpose, the consumer has to give an application to the utility company (provided
the company has opted for the ECS (Debit scheme), providing details of bank account
from which the monthly/bi-monthly bill amount can be directly deducted. Such details
have to be authenticated by the bank of the customer who opts for making payments
through this mode.

Once this option is given, the utility company would advise the consumer’s bank to debit
the bill amount to his account on the due date of the bill and transfer the amount to the
company’s own account.
This is done by crediting the account of the sponsor bank which again is generally the
bank with whom the company receiving the payments maintains the account with. The
actual bill would be sent to the consumer as usual at his address as before.
Electronic Clearing Service - Charges

As in the case of EFT, RBI has waived all its processing charges to the banks for the present.
The banks, however, are free to charge a fee from their corporate customers for use of this
facility.

Remittance of Money by NRI into India
As an NRI, an individual can remit funds into India through normal banking channels
using the facilities provided by the overseas bank. Alternately, an NRI can also remit
funds through authorised Money Transfer Agents (MTA). Of late, a good number of banks
have launched their inward remittance products which facilitate funds transfer in matter
of hours.

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