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Category Archives: Certified cheques

No EMI cheques if ECS is available

Banks have been directed by the Reserve Bank of India to not accept any fresh post-dated equated monthly instalment (EMI) cheques at locations where the facility of electronic clearing service/Regional Electronic Clearing Service is available.

The central bank has also advised banks to convert existing cheques in such locations into ECS/RECS (Debit) by obtaining fresh mandates.

Cheques complying with the CTS-2010 standard formats alone should be collected, at locations where the facility of ECS/RECS is not available.

The new ‘CTS 2010’ standard cheque has been introduced on account of several developments in cheque clearing — growing use of multi-city and payable-at-par cheques at any branch of a bank, popularity of speed-clearing for local processing of outstation cheques and implementation of grid-based cheque truncation system for image-based cheque processing.

ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. Essentially, ECS enables bulk transfer of money from one bank account to several other bank accounts, or vice-versa.

Under ECS (debit), an account-holder with a bank branch can authorise an ECS user to recover an amount at a prescribed frequency by raising a debit to his / her bank account.

Regional ECS currently operates at nine centres / locations across the country.

RECS facilitates the inclusion of all core-banking-enabled branches in a State, or group of States, and can be used by institutions to reach beneficiaries easliy.

Cheques containing fractions of Re not be rejected

Cheques containing fractions of Re not be rejected: Reserve Bank of India

If your bank has been refusing to accept cheques for amounts that include fraction of a rupee, it’s against the rules and the bank should be penalized.

In an internal circular issued earlier, the Reserve Bank of India (RBI) had warned that banks which refuse to accept cheques on such grounds from customers will be sternly dealt with.

According to an RBI circular issued in March 2007 (RBI.No.2006-2007/299), banks were advised that cheques issued by clients containing fractions of a rupee should not be rejected or dishonoured.

The RBI circular was issued by chief general manager, P Vijaya Bhaskar. It referred to a High Court ruling of February 2007 in which Justice RS Garg had said: “The RBI is hereby directed to issue fresh notifications/notices to all the banks, who have issued internal circulars, not to receive such cheques, etc. and see that stern action is taken against the persons who refuse to receive the cheques/drafts which are in fragments.”

Justice Garg further said in his order: “No Bank can say that it would not receive one rupee note or five rupees notes. A bank is a banker on whom the customer banks upon. A bank cannot say that it would receive only big notes and rest is to be circulated in the market. If a customer goes to the bank and says that he wants to deposit a sum of Rs. 1 Lakh in five-rupee notes, the bank, the clerk, the cashier cannot say that they would not receive it.”

On ‘Interest Rates on Deposits’, banks were advised that all transactions, including payment of interest on deposits/charging of interest on advances, should be rounded off to the nearest rupee; i.e., fractions of 50 paise and above shall be rounded off to the next higher rupee and fraction of less than 50 paise shall be ignored.