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Electronic Clearing Service(ECS) - FAQs Q.1. What is Electronic Clearing Service (ECS)?

Ans It is a mode of electronic funds transfer from one bank account to another bank account using the services of a Clearing House. This is normally for bulk transfers from one account to many accounts or vice-versa. This can be used both for making payments like distribution of dividend, interest, salary, pension, etc. by institutions or for collection of amounts for purposes such as payments to utility companies like telephone, electricity, or charges such as house tax, water tax, etc or for loan installments of financial institutions/banks or regular investments of persons. Q.2. What are the types of ECS? In what way they are different from each other? Ans There are two types of ECS called ECS (Credit) and ECS (Debit). ECS (Credit) is used for affording credit to a large number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment. ECS (Debit) is used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution. Working of ECS Credit System Q.3. Who can initiate an ECS (Credit) transaction? Ans ECS payments can be initiated by any institution (called ECS user) who have to make bulk or repetitive payments to a number of beneficiaries. They can initiate the transactions after registering themselves with an approved clearing house. ECS users have also to obtain the consent as also the account particulars of the beneficiary for participating the ECS clearings.

The ECS user's bank is called as the sponsor bank under the scheme and the ECS beneficiary account holder is called the destination account holder. The destination account holder's bank or the beneficiary's bank is called the destination bank. The beneficiaries of the regular or repetitive payments can also request the paying institution to make use of the ECS (Credit) mechanism for effecting payment. Q.4. How does the ECS Credit system work? Ans The ECS users intending to effect payments have to submit the data in a specified format to one of the approved clearing houses. The list of the approved clearing houses or the list of centres where the ECS facility has been provided is available at www.rbi.org.in. The clearing house would debit the account of the ECS user through the account of the sponsor bank on the appointed day and credit the accounts of the recipient banks, for affording onward credit to the accounts of the ultimate beneficiaries. Q.5. At which of the centres ECS facility is available? Ans At present ECS facility is available at more than 60 centres and the full list is available at the web-site of RBI. The beneficiaries need to maintain an account with one of the banks at these centres in order to avail of the benefit of ECS.

Q.6. How does a beneficiary participate in ECS (Credit ) scheme? Ans The beneficiary has to furnish a mandate giving his consent to avail of the ECS facility. He should also communicate to the ECS user the details of his bank branch and account particulars. Such authorisation form is called a mandate. Q.7. Will there be any need for the beneficiary to alter this mandate? Ans Yes. In case the information/account particulars undergo change, then he has to notify the ECS user to carryout changes in order to ensure continued benefits from the ECS user. In case the account particulars at the destination branch do not match, the destination branches would return the credit through their service branch to the clearing house. Q.8. Who will communicate the beneficiaries' about the credit? Ans It is the responsibility of the ECS user to communicate to the beneficiary the details of credit that is being afforded to his account, indicating the proposed date of credit, amount and the relative particulars of the payment, so that the beneficiary can match the same with the details furnished by the bank in the account statement/passbook. Q.9. What are the advantages to the ultimate beneficiary? Ans encashment. The delay in realisation of proceeds after receipt of paper instrument. The end beneficiary need not make frequent visits to his bank for He need not apprehend loss of instrument and fraudulent depositing the physical paper instruments.

Q.10. How does the scheme benefit the ECS user-like corporate bodies/ institutions? Ans The ECS user saves on administrative machinery for printing, Avoids chances of loss of instruments in postal transit. Avoids chances of frauds due to fraudulent access to the paper Ability to make payment and ensure that the beneficiaries' account dispatch and reconciliation.

instruments and encashment. gets credited on a designated date. Q.11.What are the advantages to the banks? Ans Banks handling ECS get freed of paper handling. Paper handling also creates lot of pressure on banks as they have to

encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers. In ECS banks simply get the payment particulars relating to their customers. All they need to do is to match the account particulars like name, a/c number and credit the proceeds the procedure Q.12. How can the customer track-down these payments? Wherever the details do not match, they have to return it back, as per

Ans Banks have been advised to ensure that the pass-books/statements given to the customers reflect the particulars of the transaction provided by the ECS users. Customers can match these entries with the advice received by them from the payment institution.

Q.13.

Is there any limit on the amount of Individual transactions?

Ans No value limit on the amount of individual transactions has been prescribed under the scheme. Q.14.What are the Processing / Service charges? Is it a costly service? Ans RBI has since deregulated Service Charges to be levied by sponsor banks. As regards Processing Charges levied by RBI and other banks managing the clearing houses, the same has been waived till March 31, 2009. Q.15. Is it necessary for the corporates/institutions to collect mandate from the investors? Ans Yes. A model mandate form has been prescribed for the purpose. Payment processing by banks becomes easier once the database is prepared. SEBI has also issued guidelines to investors to furnish their account numbers in their share applications for printing the same on the interest/dividend warrants, collecting the account particulars and mandates may not pose much problem. ECS debit system Q.16.What is ECS (Debit) scheme? Ans It is a scheme under which an account holder with a bank can authorise an ECS user to recover an amount at a prescribed frequency by raising a debit in his account. The ECS user has to collect an authorisation which is called ECS mandate for raising such debits. These mandates have to be endorsed by the bank branch maintaining the account.

Q.17.How does the scheme work? Ans Any ECS user desirous of participating in the scheme has to register with an approved clearing house. The list of approved clearing houses is available at RBI web-site www.rbi.org.in. He should also collect the mandate forms from the participating destination account holders, with bank's acknowledgement. A copy of the mandate should be available with the drawee bank. The ECS user has to submit the data in specified form through the sponsor bank to the clearing house. The clearing house would pass on the debit to the destination account holder through the clearing system and credit the sponsor bank's account for onward crediting the ECS user. All the unprocessed debits have to be returned to the sponsor bank within the time frame specified. Banks will treat the electronic instructions received through the clearing system on par with the physical cheques. Q.18. What are the advantages to the ultimate beneficiary? last dates. The debits would be monitored by the ECS users. Q.19.How does the scheme benefit the ECS user-like corporate bodies/ institutions? Ans The ECS user saves on administrative machinery for collecting the Better cash management. Avoids chances of frauds due to fraudulent access to the paper cheques, monitoring their realisation and reconciliation Trouble free- Eliminates the need to go to the collection Peace of mind- Customers also need not track down payments by

centres/banks by the customers and no need to stand in long Qs for payment

instruments and encashment.

payments.

realise the payments on a single date instead of fractured receipt of Q.20.What are the advantages to the banks? Ans

Banks handling ECS get freed of paper handling. Paper handling also creates lot of pressure on banks as they have to

encode the instruments, present them in clearing, monitor their return and follow up with the concerned bank and customers. In ECS banks simply get the mandate particulars relating to their customers. All they need to do is to match the account particulars like name, a/c number and debit the accounts. the procedure. Q.21.Can the mandate given once be withdrawn or stopped? Ans Yes. The mandate given is on par with a cheque issued by a customer. The only stipulation under the scheme is that the customer has to give prior notice to the ECS user, to ensure that they do not include the debits. Q.22.Can the customer stipulate any maximum debit, purpose or validity period for the mandate? Ans Yes. It is left to the choice of the individual customer and the ECS user to finalise these aspects. The mandate can contain a maximum ceiling; it can also specify the purpose as also a validity period. Q.23.What is the current coverage of the scheme? Ans At present the scheme is in operation at 15 RBI centres (ie centres where RBI manages the Clearing House operations) and at other centres where Public Sector Banks manage the clearing operations. The list of centres is available at the RBI web-site under the procedural guidelines. Q.24. Processing charges on individual transactions Wherever the details do not match, they have to return it back, as per

Ans RBI has deregulated the service charges that could be levied by sponsor banks. RBI has waived the processing charges levied by RBI and other banks managing the clearing houses till March 2008. Q.25. Which are the institutions eligible to participate in the ECS Debit scheme?

Ans Utility service providers such as telephone companies, electricity supplying companies, electricity boards, credit card collections, collection of loan installments by banks and financial institutions, and investment schemes of Mutual funds, etc.

4.1 The parties to a funds transfer under this NEFT System are the sending bank, the sending Service Centre, the NEFT Clearing Centre, the receiving Service Centre and the beneficiary branch. Request for NEFT by bank customer 4.2 A bank customer (i.e. sender or originator) desirous of remitting funds under the system shall submit an "NEFT Application Form" (to be designed by the participating bank) authorising the sending bank to debit the sender's account and transfer funds to the beneficiary as specified in the NEFT Application Form. The application could be submitted either in physical form or electronically. 4.3 The payment instruction given by the customer shall be in compliance with the provisions contained in Chapter 6 of these guidelines. Banks shall ensure that the customers are made aware of the rights and obligations of participants in NEFT system contained in Chapter 6. 4.4 A transaction within the NEFT system will be said to have been initiated when the sending bank accepts a payment instruction issued by the sender. 4.5 If in a single payment instruction, the sender directs payments to several beneficiaries, each payment direction shall be treated as a separate payment instruction. 4.6 A bank branch may reject a customer's request for funds transfer when, in the opinion of the sending branch, i) the customer has not placed funds at the disposal of the sending bank; or funds placed is not adequate to cover the sum to be remitted and the service charge; or ii) the beneficiary details given in the NEFT Application form are not adequate to identify beneficiary by the beneficiary bank. The essential elements of beneficiary's identification are: Beneficiary's Name : Beneficiary branch Name : Beneficiary Bank Name : Beneficiary's Account Type : Beneficiary's Account No. : Beneficiarys Branch IFSC : 4.7 The sending bank shall prominently display at its premises the cut-off timings up to which it shall receive the NEFT Application Forms from its customers for different settlements and the likely timings of the settlements by the NEFT centre. Any payment instruction received after the cut-off time shall be included for the next available settlement either on the same NEFT day or the next NEFT day. Data Entry at the Sending Bank Branch 4.8 The sending bank branch shall prepare the Structured Financial Messaging System (SFMS) message as and when the application for the funds transfer is received and arrange to send the message to NEFT Service Centre till the cut off time for the batch. Processing /Data Upload at Sending NEFT Service Centre 4.9 The sending NEFT Service Centre shall accept/reject the messages received from the branches/ from internet banking customer through net banking platform. Transmission/Submission of NEFT message to the NEFT centre 4.10 The sending Service Centre shall transmit the NEFT SFMS message to the NEFT Clearing Centre by using the communication network designated by Reserve Bank. Processing & transmission of NEFT message to the beneficiary banks 4.11 After consolidating all NEFT messages received from originating banks, the

NCC shall process the data and generate the settlement of each beneficiary bank which has at least one inward remittance transaction in a given batch. 4.12 NEFT messages generated for destination banks will be transmitted to the service centre of each receiving banks using SFMS. Data validation at receiving NEFT Service Centre 4.13 On receipt of the NCC NEFT message, the receiving NEFT Service Centre shall process these files and forward them to the destination branches using SFMS. Alternatively, the receiving NEFT Service Centre may use the straight through processing Interface (STPI) available in SFMS and upload these NEFT messages to their internal banking solution directly, to afford the credits to the beneficiary account centrally. Payment to beneficiary 4.14 The beneficiary branches would make payment to the beneficiaries instantly on the same day by crediting the specified account of the beneficiary or otherwise placing funds at the disposal of the beneficiary. Revocation of Payment Instruction 4.15 A payment instruction issued for execution shall become irrevocable when it is executed by the sending bank. Any revocation, after the payment instruction is executed by the sending bank shall not be binding on any other party in the NEFT system. Acknowledgement by the beneficiary bank and return in case of non-credit 4.16 No acknowledgements are envisaged under NEFT Scheme. A message which is not returned uneffected before the next settlement day is treated to have been completed and credit afforded to the beneficiary's account by the beneficiary branch. It is, therefore, vital that uneffected credits are re-transmitted back as return NEFT transactions in the immediate next batch itself. Sender to be advised in case of refund 4.17 If the beneficiary specified in the sender's payment instruction fails to get payment through the NEFT system for some valid reasons, the sender shall be informed immediately after the sending bank gets the returned NEFT. The sending bank shall also arrange to make payment to the sender by crediting the account of the sender or otherwise placing funds at the disposal of the sender. Beneficiary to be advised of the receipt of funds 4.19 After crediting the account of the beneficiary, the beneficiary bank shall advise the beneficiary of the funds received. The Statement of account/Pass Book entry or any online messaging system shall indicate briefly the source of funds as well. Holidays 4.20 In case of a holiday at the beneficiary branch, the credit will have to be effected on a value dated basis wherever feasible or latest at the commencement of business on the next working day.

February 2009

Electronic Funds Transfer (EFT)

Frequently Asked Questions Q.) What is Electronic Funds Transfer (EFT)? A. ) The EFT process will allow you to have your payments electronically transferred to your bank account. This will allow you to receive your payments from BlueCross BlueShield of Tennessee a few days earlier than when they are mailed to you. Q.) Can I participate in the EFT program if I do not use BlueAccess? A.) When you receive your payments via the EFT process, you will no longer receive your paper remittance advice. You will be able to access an exact replica of your paper remittance advice via BlueAccess in the secure area of our Web site, www.bcbst.com. The online remittance advice can be found under Additional Provider Services from the BlueAccess main menu. Anyone in your office that will need access to your online remittance advice will need to be registered to use BlueAccess. To register, simply click on the register button in the BlueAccess box in the top right corner of the BlueCross BlueShield of Tennessee homepage. Follow the registration instructions to create your password and to request your shared secret. Once you have received your shared secret, you will be ready to use BlueAccess. Note: Registration instructions are located on the Forms page of the Providers section of our Web site (under the Electronic Funds Transfer Enrollment Form). The link to get to the Forms page is located in the Administration section on the Providers page. Q.) Will EFT apply to all lines of business? A.) EFT is available to those providers that see patients that are covered by our Commercial, BlueCare ,TennCareSelect, Preferred Dental, FEP and BlueCard lines of business. Q.) How do I register for EFT? A.) You will need to complete the EFT Enrollment form located on our Web site at www.bcbst.com. The form is located under the Forms tab in the Administration section of the Providers page of our Web site. You will then mail the completed form and a voided check to:
February 2009

BlueCross BlueShield of Tennessee 801 Pine Street Chattanooga, TN. 37402 Attn: Provider Management 3TC Q.) Will I receive my EFT payment on the same day each week? A.) Yes. However, if the day that the EFT payment is posted to your bank account falls on a bank holiday, the payment will be posted on the next business day. Q.) After I start participating in the EFT program, will I continue to receive my paper remittance advices? A.) No. You will no longer be sent paper remittance advices as soon as

you begin to receive EFT payments. Your remittance advice will be available on our Web site at www.bcbst.com. The remittance advice can be found in the secure area located on the Provider page of our Web site. Q.) Will billing agencies be notified of the EFT program? A.) BlueCross BlueShield of Tennessee will not notify billing agencies of the new EFT program. Providers that utilize billing agencies for any of their administrative functions will need to notify them of their plans to participate in the EFT program. This information will be important to the billing agency because of the fact that the providers payments will be electronically posted to their bank accounts. The billing agency will also need to know that the provider will no longer receive a paper copy of the remittance advice. Q.) If I submit claims electronically and I choose to participate in EFT, will my electronic vendor be notified of this? A.) BlueCross BlueShield of Tennessee will not notify your electronic vendor concerning your participation in the EFT program. For information regarding this process, please contact BlueCross BlueShield of Tennessee at 18009247141 and choose the option eBusiness enrollment. .
February 2009

Q.) If I participate in EFT, what day will my check be posted to my bank account? Also, when will my remittance advice be available on the BlueCross BlueShield of Tennessee Web site? A.) For our Commercial, FEP, BlueCard and Preferred Dental lines of business, your remittance advice will be posted to our Web site on Tuesday and the check will be posted to your bank account on Wednesday. For the BlueCare/TennCareSelect lines of business, your remittance advice will be posted to our Web site on Thursday and the check will be posted to your bank account on Friday. Q.) What if I choose to change bank accounts? How will I make BlueCross BlueShield of Tennessee aware of this change in my bank account information? A.) If you choose to make a change in the bank account in which the EFT funds are deposited, you will need to complete another EFT Enrollment form and mail to BlueCross BlueShield of Tennessee as soon as possible to ensure that future EFT payments are credited to the appropriate account. Q.) Who do I contact if I have a question regarding EFT? A.) For answers to EFT questions, please call our Provider Service number at 18009247141.

Q.) How will I know if my EFT registration information was received by BlueCross BlueShield of Tennessee? A. ) As soon as you have been set up to receive EFT payments, you will receive an acknowledgement letter from BlueCross BlueShield of Tennessee. This letter will inform you that you will begin receiving EFT payments on the next payment cycle. Q.) What if an incorrect payment amount is credited to my bank account? A.) BlueCross BlueShield of Tennessee reserves the right to correct an incorrect payment amount that is credited to the providers bank account. Any other overpayment amount will not be recovered from the provider via this process.

WHATWhat is export bill purchase? Financing of money in transit supplied by the bank with the export bill as the mortgage as required by the exporter after delivers the goods and presents the documents requested by the letter of credit or the contract. Export bill purchase business has the following scope: the export bill purchase under the letter of credit and the export bill purchase under the documentary collection; the foreign currency export bill purchase and RMB export bill purchase. WHYWhy choose export bill purchase? Accelerate the capital circulationThe exporter can get paid in advance before the importer makes the payment, and the capital circulation is speed up; Simplify the financing procedureThe financing procedure of export bill purchase is simpler and more convenient than that of the working capital loans; Improve the cash flow Export bill purchase can increase the present cash inflow of the exporter to improve the financial condition and strengthen the financing ability; Save the financial expensesThe clients can choose the financing currency in accordance to the interest rates of different currencies in Bank of China, so as to minimize the financial expenses. WHEN When to use export bill purchase? The exporter has limited current capital, and relies on rapid capital circulation to develop the business;

The exporter encounters temporary difficulty in capital circulation after delivering goods and before getting paid; The exporter faces new investment chance after delivering goods and before getting paid, and the prospective income rate is surely higher than the negotiated interest rate. HOWHow to handle export bill purchase operation? The Operation flow

Attentions: 1.Sign the General Financing Agreement with the bank; 2.Submit the formal finance application to the bank (commonly the advising bank or the negotiated bank); 3.The applicant under the letter of credit should be the beneficiary of the letter of credit; 4.The export bill purchase under L/C restricted to other banks by negotiation will not be handled; 5.If applying the export bill purchase under the letter of credit, it would be best that documents, submitted by the exporter, are in compliance with the terms of the letter of credit; 6.If the exporter wishes to finance through the export bill purchase, they had better avoid such conditions as follows: a. Non-negotiated transport documents; b. Failure to submit full set of

negotiated bills of lading; c. Transferable letter of credit; d. L/C with soft clauses; e. documents with essential discrepancies.

Packing Credit Loan or advance for financing the purchase, processing, manufacturing or

packing of goods prior to shipment/working capital expenses towards rendering of services on the basis of letter of credit opened in his favour or in favour of some other person by overseas buyer or a confirmed and irrevocable order for the export of goods/services from India or any other evidence of an order for export from India having been placed on the exporter or some other persons unless lodgment of export order of LC has been waived. Liquidation To be liquidated out proceeds of bills drawn for exported commodities on its purchase, discount etc thereby convert pre shipment credit into post shipment credit