RBI tightens norms in bid to discourage cheque usage

Tags: Banking
Banks may soon charge a high amount to issue you a second chequebook once you have exhausted your first one depending on your cheque usage history. Besides, in case, you pay your credit card dues through a cheque, then a high charge may be levied by the card issuing bank. These recommendations form a part of a discussion paper titled ‘Disincentivising issuance and usage of cheque’ put forth by the RBI’ to discourage individuals from cheque usage and increase payments through electronic modes.

The draft norms also suggest that cheque collection boxes should be only put up at banks’ branches and not at public places to reduce the convenience of using cheques by individuals.

At present, most banks offer 25-50 leaves in a cheque book free of cost on a quarterly or annual basis to their account holders. Beyond the free cheques, banks charge Rs 2 to Rs 3 per cheque leaf. In most banks, current account holding customers are not given any free cheques though the charges are very nominal ranging from Rs 3 to Rs 4 per leaf.

“Free chequebooks may be kept to a minimum number on a per annum basis. The charges levied by banks beyond this number may range from moderate to steep (slab rate) depending upon the cheque usage history of the customer,” said the RBI discussion paper.

In case of fresh loans, post-dated cheques (PDC) should be completely stopped and repayments should be only through electronic payments, with suitable conditions for late payment and non-payments, which should be disclosed upfront. The paper suggests of applying some amount/value limit for cheque issuance by individuals.

“In case of individuals who have invested in shares/debentures/bonds and have not opted for receiving dividend/interest directly into their bank accounts, we may consider levying a processing charge when the cheque is deposited into their bank account for collection. To begin with, this may be implemented in major towns and cities where ECS facility is already available and then gradually extended to all areas,” said the RBI paper.

Despite electronic payments in recent years registering a year-on-year growth of nearly 30 per cent on an average since 2003, in absolute terms cheque volumes continue to be high at nearly 52 per cent of the total non-cash payments turnover of around 2500 million in 2011-12.

An analysis of the volume of cheques cleared through the MICR cheque processing centres (MICCPCs) across the country during the first half year of the financial year 2012-2013 reveals that around 89 per cent of the cheques cleared in these centres were below Rs 1 lakh under various categories However, the same analysis also reveals that, out of the cheques cleared in the first half (April-September) of 2012 across all MICRCPCs, in the value band of cheques issued up to Rs 1 lakh, about 54 per cent of the cheque volume belong to current account related accounts, whereas in all other value bands the share of current account related cheques is nearly 64 per cent. The rest of the cheques pertain to savings bank account, government accounts and demand drafts.

RBI has asked for public comments and feedback on the discussion paper upto February 28.

The draft paper also contains a host of suggestions from discouraging institutional users and government departments from making or accepting payments through cheques.

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