e-clearing cuts down banks' paperwork

Retail loans business of banks is booming, and keeping pace with it is the cumbersome paperwork related to collection of equated monthly instalments (EMIs).

But growing acceptance of electronic clearing service (ECS) debits is gradually coming in to the rescue of staff across banks burdened with piles of paper works. The burden is definitely lessening with ECS' increasing acceptance.

As many as 20 per cent of all loan accounts on an incremental basis are now accompanied by ECS debit mandates for payment of EMIs.

The banking sector generates around five lakh new retail loan accounts every month, and almost one lakh of these customers sign up for ECS debit mandates.

The rate at which the number of bank customers is increasing in terms of acceptance of the ECS mode for payment of their EMIs starkly contrasts the scenario a year ago, when ECS debits accounted for only a small percentage of the total loan accounts.

The total outstanding retail loans have grown by 30 per cent to Rs 3,00,000 crore at the end of June 2005 from Rs 2,30,000 crore a year ago.

Only 4.5 per cent of the total banks' retail customer base has given ECS debit mandates, suggesting lower comfort levels earlier with the electronic payment option.