ChequeMan Blog

Validity of Non – CTS Cheques extended

As per the Revised Guidelines of RBI the validity of Non-CTS compliant cheques have been extended till 31st  July 2013. Earlier it was extended till 31st March 2013. RBI has issued a note no. 1622 dated 18 March 2013 regarding extension of last date of CTS-2010 cheque book.

RBI/2012-13/444
DPSS.CO.CHD.No. 1622/04.07.05/2012-13

March 18, 2013

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks/Local Area Banks

# Standardization and Enhancement of Security Features in Cheque Forms/Migrating to CTS 2010 standards

Madam / Dear Sir

A reference is invited to our circular DPSS.CO.CHD.No. 955/04.07.05/2012-13 dated December 14, 2012. On a review of the progress made by banks so far in migration to CTS-2010 standard cheques and in consultation with a few banks and Indian Banks Association, it has been decided to put in place the following arrangements for clearing of residual non-CTS-2010 standard cheques beyond the cutoff date of March 31, 2013.

1. All cheques issued by banks (including DDs / POs issued by banks) with effect from the date of this circular shall necessarily conform to CTS-2010 standard.
2. Banks shall not charge their savings bank account customers for issuance of CTS-2010 standard cheques when they are issued for the first time. However, banks may continue to follow their existing policy regarding cheque book issuance for additional issuance of cheques, in adherence to their accepted Fair Practices Code.
3. All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing houses [including the Cheque Truncation System (CTS) centers] for another four months up to July 31, 2013, subject to a review in June 2013.
4. Cheque issuing banks shall make all efforts to withdraw the non-CTS-2010 Standard cheques in circulation before the extended timeline of July 31, 2013 by creating awareness among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site etc.
5. A progress report in this regard to be submitted to this department in the format prescribed in the annex, enabling monitoring of the progress made by banks in respect of migration to CTS-2010 standard cheques.
6. In addition, the bank-wise volume of inward clearing instruments processed in the Cheque Processing Centers will be monitored with respect to the CTS-2010 / non-CTS-2010 standard cheques presented on them.
7. No fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted by lending banks in locations where the facility of ECS/RECS (Debit) is available. Lending banks shall make all efforts to convert existing PDCs in such locations into ECS/RECS (Debit) by obtaining fresh mandates from the borrowers.

The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).

Please acknowledge receipt and confirm compliance.

Yours faithfully,
(Vijay Chugh)
Chief General Manager

Cheque Fraudulent

Cheque fraud is one of the major cause of monetary or financial loss of banks and the business. It leads to bouncing of cheques, non payment and paying of bouncing fees.

Some of the example of cheque fraudulent are:

• Floating Cheques: people can go to shops or stores and make purchases and issue post dated cheques. Later on the store would face problems as the money would not show up in their account and the bank may later on reject the cheque.
• Illegal acquiring of money: one can take print out of cheques to withdraw money from fake bank account.
• Forging Cheques: one can forge signatures of the cheque holder and cash the cheque.

Bank Charges: 10 most common charges to the account holders

1. AQB and AMB charges: If the Average balance over a month quarterly is less than the required amount then the account holder is charged with a fine of 250/- to 500/- per month/quarter. So as to avoid it, do not let your bank account go lower than the AQB or AMB at any point of time. If owing to emergency your account balance goes below AMB / AQB, stash funds double of the shortfall for the number of days AQB / AMB was not maintained.
2. Outstation Cheques: If the cheque being deposited is payable at another city then the bank charges you an extra amount for clearing that cheque. So, avoid taking cheques payable in a separate city from your debtors. And if you have to accept such a cheque, you may want to deposit the cheque in your bank’s branch in the city where the cheque is payable.
3. Cash Deposit Charges: Some banks allow only couple of free cash deposits and charge certain amount of money for depositing cash over that limit or they have placed a limit to depositing cash in a day. Try not to accepting cash and trying to deal via cheques or online bank transfers to minimize the physical flow of cash. This would also safeguard you with the high risk of fake currency.
4. Cash Withdrawal Charges: On withdrawing large amount of funds bank charges a certain amount of money. To avoid it try paying by cheque or by NEFT.
5. NEFT/RTGS Charges: Bank charges Rs 5/- to 25/- per NEFT and Rs 25/- per RTGS.
6. Cheque Usage Charges: A certain number of cheques are issued by bank for a year. If you want extra cheque leaves then you have to make a request to the bank for the same and pay Rs 2/- per extra cheque.
7. Cheque Bouncing Charge: Bouncing of cheques due to lack of funds is an offence and banks charge a hefty sum of money for the same. It may range from Rs 250/- to 1500/-.
8. Debit Card Fee: Account holders have to pay an annual fee of Rs. 100/- to 250/- per year for the debit cards.
9. ECS Returns: You must ensure that sufficient balance is there in your account so as to prevent ECS payment is bounced.
10. In Branch Transaction: Avoid visiting to bank frequently. Try to use more of net banking and ATM facilities.