Dealing with incidents of frequent dishonour of cheques

  

Dealing with incidents of frequent dishonour of cheques

  

Reserve Bank of Inda, Department of Banking Operations and Development, vide paragraph 15.4 of our Master Circular DBOD.No.Leg.BC.9/ 09.07.006/2009-10 dated July 1, 2009 on Customer Service has advised Banks to take certain steps for dealing with incidents of frequent dishonour of cheques of Rs. 1 crore and above.

Now vide  Lr.No. RBI/2009-10/213 DBOD.No.Leg.BC.59 /09.07.005/2009-10, dt November 9, 2009, addressed to All Scheduled Commercial Banks (Excluding RRBs), has advised Banks to have a Board approved policy for dealing with frequent dishonor of cheques of value of less than Rs. 1 crore.  Reserve Bank of India is clear that this policy should also deal with matters relating to frequent dishonor of ECS mandates.

This complete Notification can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=5353&Mode=0

Basically, Post Dated Cheques/ECS Debit Mandates issued for Loan Re-payments, cannot be shifted to ePayments (RTGS or NEFT)

In case customers issue cheques to Government Agencies, Utility Providers, customers ensure sufficient funds are available in the account, to clear such cheques.

However, Banks and other stake-holders should explore if Cheques issued for other than the above mentioned two categories, can be shifted to ePayments. 

RTGS/NEFT Transactions are executed by Banks only if Balance is there in the account to DEBIT. Hence, there will no question of DISHONOUR !!!

This will reduce the number of frequent dishonor of cheques, leading to few cases to deal with, which in turn will increase the operational efficiency of the Banks.