Cheque books may go the way of physical share certificates if proposals mooted by the Reserve Bank of India (RBI) are enforced. In a discussion paper on discouraging cheque usage, RBI has proposed charges for individuals when payments are made by cheques and penal processing fees for institutions that continue to issue warrants rather than credit amounts to investors’ accounts directly.
RBI also wants every entity making or receiving bulk payments to move to direct electronic transfers to recipients’ bank accounts.
Interestingly, the panel has found that one of the biggest culprits standing in the way of electronification of payments are banks themselves with their demand for post-dated cheques from borrowers.
The paper points out that at present, the cheque issuer (drawer) does not bear any charges for issuing a cheque and proposes that the drawer is made to bear some charges when cheques are issued. “Such charges may be levied on an ad-valorem basis at par with charges applicable in electronic payment systems.
Similarly, cheque collection charges may also be reviewed and charges levied (on the payee or beneficiary of the cheque) even for local cheques beyond certain amount limits. In case of corporates, charges may be levied irrespective of amount limits for cheques deposited into their current account considering the expenditure incurred by the collecting bank,” the paper said. The discussion paper comes out two months before RBI is set to roll out its cheque truncation system.
Under this, cheques will be dematerialized after they are received by the bank and only their images transmitted for settlement.