Local cheques will get cleared on same day - RBI directive

Economic Times
MUMBAI: Banks will now clear local cheques deposited with them on the same day or, at most, early next day. A spate of consumer complaints and
consumer court directions have forced the central bank to roll back deregulation of cheque clearances by banks.

Four years after it said banks could frame their own cheque-clearing policies, RBI has issued fresh directives to banks stating that, for local cheques, credit and debit will be given on the same day or, at most, on the next day of their presentation for clearing.

"Ideally, in respect of local clearing, banks shall permit usage of the shadow credit afforded to the customer accounts immediately after closure of relative return clearing and in any case withdrawal shall be allowed on the same day or maximum within an hour of commencement of business on the next working day, subject to usual safeguards," RBI said in its circular.

"The central bank is back to regulating clearance as the Payments and Settlement Act entrusts it with the responsibility of smooth and timely settlement of payments and transactions," said a government bank official who asked not to be named.

"As a result of this stipulation, the central bank has asked banks to frame a proper cheque-clearing policy (CCP) that has to be widely publicised, following the guidelines issued by National Consumer Dispute Redressal Commission in August'08."

An official close to the central bank said delays in cheque-clearing will soon be history. "Already 50 centres in the city are enabled for `speed clearing," he said.

Speed clearing enables outstation cheques presented in the branch of one centre to be cleared in another centre where there is a bank branch. This is possible only if both, the branch of issue and the branch where the cheque is deposited, are in centres that are 'speed-clearing' enabled.

The central bank has fixed a time-frame for collection of outstation cheques as well. The time-frame for collection of cheques drawn on state capitals and major cities has been capped at seven days and ten days respectively. For all other locations, banks have to clear the cheque within 14 days.

If there is any delay in collection beyond this period, the bank has to pay the customer interest at the rate specified in the bank's cheque-clearing policy. If no interest rate is specified, the bank will have to pay interest at the rate on fixed deposits for the corresponding maturity.