95% of India’s Public Sector Bank
Branches/Private Sector Bank Branches/Foreign Bank Branches are on the CBS.
To
enable the bank customers to take full advantage of the CBS capabilities, RBI
has advised All Scheduled Commercial Banks including RRBs /Urban Co-operative
Banks / State Co-operative Banks /District Central Co-operative Banks, to
pro-actively issue Multicity cheques.
Way back in 2007, RBI had advised
Banks, that the facility of "payable at par" / "multi-city"
cheques should be issued to all the eligible and requesting customers.
Over the years, the feedback to RBI
was that banks were not encouraging PAP/Multicity cheques.
Primary
reasons for not encouraging PAP/Multicity cheques were
01) Decrease in float income on the CASA
balances
02)Increase in fraudulent transactions in PAP cheques. Here, Bank
customers to have a role.
The primary blocks were PAP cheques with
value cap, PAP cheques only to HNI customers or levying service charges when
the PAP cheques are cleared at non base-city locations.
However,
keeping in view the enhanced infrastructure in Clearing Process and with CTS
extending its scope, RBI has advised to issue only "payable at par" /
"multi-city" CTS 2010 Standard
cheques to all eligible customers.
As the PAP cheques will be cleared
as Local cheques in the clearing houses, no extra charges should be levied on
customers.
To minimize the associated risks,
Banks have to have appropriate Board approved risk management procedures based
on risk categorization of accounts
Banks to host the updated Board approved
policy on their web-site of banks and forward a copy thereof forwarded to RBI,
DPSS.
Issuing only PAP cheques will reduce
the cheques under Speed Clearing and also reduce the TAT for clearance of the
cheques. In the long run, all the players will prefer to move to ePayments, as
further efficiencies are in ePayments.
Re-disseminated
by Prashant N. Banker by daytime-Blogger by night.
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