I’ve come across an interesting situation today and I was surprised to know a fact about ECS mandate.
I have a SBI home loan and my EMI is paid from XYZ bank and ECS mandate was signed by me at the time of loan sanction. Now I’ve converted my home loan to MaxGain. This conversion process involves closing of your existing Home loan account and creating a new MaxGain home loan account and then they will transfer entire loan balance to this MaxGain account.
So for ex: My initial home loan account number is 11111, and newly created MaxGain home loan account is 22222. They have closed a/c 11111 and moved the remaining loan balance to new a/c 22222.
Now, ECS mandate, which was submitted to XYZ bank contains the old home loan a/c number (11111). I converted my term home loan account to MaxGain last month. This month 10th is my EMI date. EMI amount was debited on 10th and I got that amount back on 13th saying ECS returns. I immediately approached SBI regarding this and they said this happened because your loan account number changed and I need to contact XYZ bank and ask them to update the ECS mandate with the new home loan a/c number. XYZ bank said I need to generate new mandate and submit it at both SBI and XYZ bank.
Here comes interesting part….
Instead of creating ECS with XYZ I thought why not use my linked SBI savings account for ECS and I immediately asked about it with SBI branch. My SBI savings account branch manager told me that I don’t have to submit any ECS form specially for this, instead I can create a standing instruction to credit same EMI amount to MaxGain/OD account from SBI savings account on same EMI date and that should suffice is what manager said to me. I was shocked and I asked her couple of times to confirm that and she said it is.
Do anyone know about this kind of facility? Till now I was in a impression that ECS is mandatory for any loan account, but it doesn’t look like now.
Another question was raised in my mind after this incident, when we create ECS mandate and submit it to both banks (receiver and sender) then who initiates the request on the EMI date every month? Is it loan account bank initiates the EMI amount transfer request or sender bank automatically initiates the transfer request and sends EMI amount to loan account? Any one got any idea about it?