Minimize number of free cheque books issued to individuals: RBI

February 7, 2013

The Reserve bank of India (RBI) has recommended in its discussion paper that the number of free cheque books given per year to individuals may be kept to a minimum and instead they should be encouraged to use electronic payments.

As per central bank’s recommendations:

Banks may levy moderate or steep charges on cheques issued beyond this minimum number.
In case of fresh loans, post-dated cheques (PDCs) 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.
Current PDCs should be converted to electronic payment mandates within a prescribed timeline.
Credit card dues should be paid electronically. In case cardholders make payments of dues using cheques, then the issuing banks may levy high convenience charge.
Banks may set some amount/value limit for cheques issued by individuals. Such charges may be higher than the charges levied on electronic payments of similar value.
Banks may levy a processing charge in case of individuals who have invested in shares/debentures/bonds and have not opted for receiving dividend/interest directly into their bank accounts, deposits the cheque into their bank account for collection.
Cheque collection boxes at public places should be discouraged and should be provided only at bank branches.

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