The dividend declared by a company is paid to the shareholders in either of the following two ways:
- Through the National Electronic Clearing Service (NECS), also called the ECS.
- By mailing the dividend warrants to the physical address of the investor.
The ECS facility provided by the Reserve Bank of India gives the investor an option to receive dividends directly in their bank accounts rather than receiving those dividend warrants through the post. Under the ECS option, the company credits the dividend amount directly to the investor's bank account. The transaction is labeled as ECS in the bank statement or passbook. The Company sends an intimation to the investor after the transaction has been processed.