ECS Debit Mandate and its cancellation

ECS Debit cancellation

Can an ECS debit mandate be cancelled or withdrawn prematurely?

Yes. Electronic Clearing System Debit mandate or the Auto Debit Clearing mandate given to an institution by giving consent to deduct particular amount periodically can be cancelled by the bank account holder at any time as per his/her wishes. Nobody can compel the account holder to not to stop or withdraw the ECS/Auto Debit mandate which was given for paying insurance premiums, mutual funds, loan EMIs, for paying subscription amount to service providers like Just Dial, which provides various services like providing leads for various businesses.

However, prior to placing cancellation request with the banker (account holding bank), it is advisable to make a formal/written request with the service provider/user institution to which you have given ECS debit mandate. However, the account holder is entitled to withdraw the mandate /ECS debit instructions from his/her banker even without involvement of the user institution. The withdrawal request of the customer would be deemed as stop payment instruction in cheque clearing system.

It is advisable to withdraw the ECS debit prior to a month of the next due date so that the bank or institution gets enough time to process the said request.

Auto Debit cancellation request of the bank account holder has to be accepted

Your banker can not reject your request for cancellation of auto debit mandate since the relationship between the customer and Bank is of a creditor and a debtor and not of a Trustee. Therefore, the bank has no option to compel you to continue the auto-debit mandate against your will.

What if bank refuses to cancel your auto-debit mandate?

If a bank refuses to cancel your request for auto-debit mandate on the ground that the account holder has to get NOC from the service provider, then such conduct of the bank would be considered as unfair trade practice and would also amount to deficiency in services of the said bank. The loss arises to the account holder due to such refusal of the bank to cancel auto debit mandate would have to be compensated by the concerned bank.

Similarly, the service provider/user institution cannot compel you to pay only through ECS or Auto Debit mandate. At any point of time, after giving a month notice period, you can withdraw the ECS mandate and take steps to change the mode of payment as per your convenience. The user institution cannot force you to continue the ECS mandate against your will.

If you find your services provider’s service quality is not up to the mark and you want to cancel such subscription or you want to make some other mode of payment for paying your utility bills, EMIs etc, then you can straightaway withdraw the ECS debit mandate by making formal/written request to your banker.

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Unauthorized Electronic Banking Transaction: How to get refund?

fraudulent transaction

The increase in use of online transaction using internet banking, use of Debit/Credit Card for online shopping, swiping of cards through Point of Sales (PoS) machines etc. may have made our life easy but, it has also made us vulnerable to fraudulent or unauthorized electronic transaction due to illegal activities like cloning, phishing, card swapping, hacking, theft etc.

The unauthorized electronic transaction or fraudulent deduction of money from our bank account or credit card can be thwarted if we keep pin number of Debit Cards, Credit Cards and passwords of Phone banking, Internet Banking services safe. Besides this, it is also necessary to keep safe custody of the mobile phone which is linked with banking services.

Zero liability of a customer

If customer loses money due to the deficiency in the system or the due to negligence on the part of the bank and the customer notifies the bank regarding the unauthorized electronic deduction within three days of getting notification from the bank, then there would be no liability on the customer. 

Limited Liability of a customer

In case the customer loses money due to the sharing of otp or cvv or the payment credentials with the third party, then the customer has to bear the entire loss until he/she reports the unauthorized transaction to the bank. Any loss occurring after the reporting of such loss would be borne by the bank.

In cases where the responsibility for the unauthorized electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and the customer notifies the bank within four to seven working days of receiving a communication of such transaction, the per transaction liability of a customer will be limited to the transaction value or the amount mentioned in the table given below, whichever is lower:-

For BSBD (Basic Savings Bank Deposit) Account, the maximum liability of the customer is Rs.5,000/-. Whereas for all other savings account, pre-paid payment instruments and Gift Cards, Credit Cards with limit up to Rs.5 Lakh, the maximum liability of the customer is Rs.10,000/- and for all other Current/Cash Credit/Overdraft  Accounts, the maximum liability of the customer is Rs.25,000/-

It is pertinent to note that if the delay in reporting is beyond seven working days, the customer liability will be determined as per the bank’s Board approved policy (decision with respect to the refund will be the discretion of the bank as per their policy)

Timeline for refund

The bank has to make refund of the amount which has been deducted unauthorized manner within 10 working days of the receiving notification from the customer.

Mobile Phone and Email as a means of receiving communication from bank

One has to keep the banking services linked with recent phone number and email so that unauthorized deduction from the bank account or credit cards gets intimated through the mobile number and e-mail. After all, informing the bank about the unauthorized deduction of money at the earliest increases the probability of refund from the bank.

Therefore, in order to get refund of the amount which has been deducted due to the unauthorized electronic transaction or fraudulent deduction of money from the bank account or credit card, the affected customer has to immediately report to the bank about the unauthorized or fraudulent electronic transaction.

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