ECS Debit – Return Reasons

ECS Debit – Return Reasons

It is observed that the number of ECS Transactions being RETURNED by the Destination Banks are  on the increase.

Your ECS Debit transaction can be rejected by your Banker for the following reasons

As per RBI’s Electronic Clearing Service (Debit Clearing) Procedural Guidelines, the following are the Standard Return Reasons.

Code No.        Reasons for Return

1.                    Account since closed / transferred

Explanation: - Account since closed – The destination account has been closed. Obviously, this has to be returned.

Account Transferred: This reason was valid in a de-centralised environment, when the ECs transactions were being routed to the base branch.

However, under CBS this is a very sparingly used Return Reason.

2.                    No such account:

Explanation: The account number in the ECS Transaction is not in the Destination bank’s books.

Potential causes: The customer’s account has been migrated to the CBS domain, and a new number allotted. However, the ECS transaction is still coming with the old Account number.

3.                    Account description does not tally

Explanation: The account holder’s name in the destination bank and the account holders name in the ECs transaction do not match.

This is a very rare reason, as the Account description is tallied at the time of the Mandate Acceptance by the Destination bank.

4.                    Balance insufficient

Explanation: Simple, inadequate balance to debit the ECS transaction amount. It is to be noted, that there should be sufficient balance at the time of the debit, and not during the business day. For eg: When the destination account is debited with the ECS transaction at 11.30am, 14/07/2010, sufficient balance should be there. It is of no use, if there was sufficient balance at 10.00am or 2.00pm on the same day.

5.         Not arranged for / exceeds arrangements

Explanation: This reason is used for Overdraft Accounts, where the drawn balance exceeds the available balance.

6.         Payment stopped by drawer

Explanation: The destination account holder has instructed his/her banks for  Stop Payments of the Particular ECS Transaction.

Potential causes: Dispute between the account holder and the Beneficiary. Loan account is closed, but still the ECS transactions are being routed.

7.         Payment stopped under court orders

Explanation: The message is clear, Payment stopped under court orders

8.         ECS mandate not received

Explanation: The Destination bank has not received the ECS Mandate.

ECS Mandate is the Debit Authorisation by the customer to the bank.

9.                    Miscellaneous (to be specified)

Explanation: Ah, this is the most exciting or treacherous Return Reason

Will explain in detail in tomorrow’s post

ECS Credit Mandate - Are they necessary now?

As per the ECS Credit Procedural Guidelines, a Mandate Form is required for ECS credits.

A Mandate for a ECS Debit transaction is understandable, but in today’s scenario, is a Mandate required for ECS Credits?

What are the transactions routed through the ECS Credit mechanism?

01)   Dividend payouts

02)   Salary payouts

03)   Government department payouts.

What does an ECS Credit Mandate contain?

The Model Mandate Form is quoted here from the Reserve Bank of India, ECS Cr procedural guidelines.

FORM NO.E-5

Appendix – VIII

Electronic Clearing Service (Credit Clearing)

Model Mandate Form

(Investor/customer’s option to receive payments through Credit Clearing Mechanism)

Name of the Scheme and the periodicity of payment

No.

1)    Investor/customer’s name:

2)    Particulars of Bank account

A          Name of the Bank     :

B          Name of the branch   :

            Address                     :

            Telephone No.           :

C         9-Digit code number of the bank and branch

appearing on the MICR cheque issued by the bank:

            D         Type of the account (S.B., Current or Cash Credit )

 with code (10/11/13)

            E          Ledger and Ledger folio number:

            F          Account number (as appearing on the cheque book)

(In lieu of the bank certificate to be obtained as under, please attach a blank cancelled cheque or photocopy of a cheque or front page of your savings bank passbook issued by your bank for verification of the above particulars)

3              Date of effect:

I hereby declare that the particulars given above are correct and complete. If the transaction is delayed or not effected at all for reasons of incomplete or incorrect information, I would not hold the user institution responsible. I have read the option invitation letter and agree to discharge the responsibility expected of me as a participant under the scheme.

(.....................................)

Signature of the Investor/Customer

Date

            Certified that the particulars furnished above are correct as per our records.

Bank’s Stamp

Date:                                                                                       (.................................)

Signature of the authorised

official of the Bank

In my view, the need for ECS Credit Mandates was required in the era of Physical Holding of Shares.

Once the shares moved into dematerialized mode, a Bank Account is compulsory.

And the bank account details are fed into the Demat Account screen. This screen captures all the data required for a successful ECS Credit transaction.    

Hence, in the present scenario there is no need for a ECS Credit Mandate form.

Interesting Trends in ATM Withdrawals

Interesting Trends in ATM Withdrawals in India.

The Document can be accessed at
http://www.npci.org.in/documents/Publications.pdf

The Highlights are:
01) The average Withdrawal size in NPCI managed ATM's is growing.
         In November 2009, it was Rs2,766/- whereas in May 10 it increased to Rs2,982/-

02) 37% of the withdrawals are below Rs.1000/-, though this share is coming down slowly.
         This 37% of the transactions can be shifted to the POS route, as already announced by Reserve Bank of India.         
                My earlier post on this is @
http://prashantnepayments.blogspot.com/2009/08/cash-withdrawal-from-pos-terminals.html


One recent trend which I have come across, is bank customers are not eager to withdraw small amounts through ATM's, especially in the Rs2,000/- to Rs4,000/- range. This is because the ATM's dispense a majority of Rs.500/- notes, whereas folks prefer Rs100/- notes.
This is pushing back the such customers from ATM's to Bank counters!!

01/07/2010 - RTGS/NEFT is closed Payments Holiday

01/07/2010 -  is a ePayments Holdiay
RTGS/NEFT is closed due to the Half-Year Closing of Books of Reserve Bank of India.

As this is the middle of the week, and this being a scheduled holiday, all ePayments Users must have planned their activities well in advance.  
The spill-over effect will be seen on Friday and Saturday.

However, as the NEFT Settlement Hours have been increased, there should be a smooth flow of transactions, without any bottle-necks anywhere.

The RTGS Customer timings on 30th June i.e tomorrow might be extended till 7.00pm, to enable customers to do a last minute juggling of funds, if required.

The real challenge would be to manage Clearing Adverse Situations on 1st July 2010, at locations  where Clearing will be held as usual on 01/07/2010.

‘Prohibiting alterations / corrections on cheques ' - Clarifications

 Prohibiting alterations / corrections on cheques ' - Clarifications

Reserve Bank of India, on 22^nd June 2010, issued a clarification regarding ‘prohibiting alterations / corrections on cheques'.

This must have caused disappointment in among many!!

The Circular can be viewed at  http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5741&Mode=0

The above circular is in response to it’s original circular dt.22/02/2010

@ http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5509&Mode=0

The whole issue is a classic example of mis-communication. The intention of RBI was to convey the proposed changes under the Cheque Truncation Scenario, when the cheques will be processed on Scanned Images.

Nowhere in the Original circular, did Reserve Bank of India, mention that the proposed enhancements would be effective from 01/07/2010.

A top official of a leading bank was quoted in the media, stating that the new rules would be effective from 01/07/2010, and this was picked up by all.

Newspaper articles, blogs, internet sites, discussion forums were all excited by this notification of ‘prohibiting alterations / corrections on cheques'.

It  is nice that RBI promptly issued a clarification.

This Clarification is very clear and also lays down the road-map,

0101)   That the "prohibiting alterations / corrections on cheques'", is applicable for CTS Locations.

02)That it is the Collecting Banker’s responsibility to ensure, ab initio, that such cheques are not accepted for presentment in CTS.

03) That this is not applicable to cheques cleared under other clearing arrangements such as

 -- MICR clearing,

 -- non-MICR clearing,

 -- over the counter collection (for cash payment)

 -- or direct collection of cheques outside the Clearing House arrangement .

04)That this prescription will be effective from 01/12/2010.  Now all the stake-holders have a definite deadline to adhere too.

05) That with regard to other aspects contained in the RBI  circular dt.22/02/2010, separate communication will follow from Indian Banks' Association / National Payments Corporation of India.