The Hindu Business Line : RBI group recommends fee for cheques, drafts

Recommendations
Price paper-based DD, pay orders, bankers' cheques higher than e-transactions.
Make transactions through Electronic Clearing Services free for the first 3 years.

Mumbai April 21 Cheques and drafts may soon attract a fee, if the recommendations of a Reserve Bank of India (RBI) study group are accepted. The move would encourage the migration from paper-based funds movement to electronic funds transfer, says the group.

"Currently, the service charges for Magnetic Ink Character Recognition processing are borne by banks. Banks may have to educate their customers on the need to migrate to electronic processing and in case the paper-based cheques are continued, the service charges relating to the processing of such cheques may be passed on to them," said the RBI study.

The working group also suggested that paper-based demand drafts, pay orders and bankers' cheques issued by banks could be priced higher than electronic transactions.

The RBI had constituted the group to examine various issues linked to migration from paper-based funds movement to electronic funds transfer. The approach suggested by the group is to encourage, monitor and mandate electronic payment systems. The study group suggested that Electronic Clearing Services-based transactions should be made free for the first three years.

For certain transactions which are essentially used for effecting non-paper based funds settlement — such as for reimbursement of credit card dues, payment by banks to card-accepting member establishments for transactions settled through the point-of-sale terminals — it is recommended they should not be through paper-based cheques.

The report also suggests ECS-based transaction settlement including facilities offered by bill payment utilities such as Bill Junction, BillPay should be the mode used for these transactions. A similar approach could be adopted for mobile phone payments as well.

It has suggested that internet-based transactions could be made free of charge for the customers as banks save on costs compared to paper-based transactions.

Real-time value

"Large value customer transactions of Rs 10 crore and above each should be ideally settled through the Real Time Gross Settlement (RTGS) system," said the report. Other transactions could be settled through the National Electronic Funds Transfer (NEFT) System.

The group recommends that banks could discourage customers to settlement transactions for face values of less than Rs 10 lakh through the RTGS system in view of the costs (including liquidity requirements) and their reduced systemic importance.

Banks have also been asked to encourage the use of RTGS and NEFT for fund transfers in the equities market.

All banks, including co-operative banks actively participating in various financial markets, whether scheduled or not, should be encouraged to become members of RTGS and open a current account with the RBI. The group has given an estimated time of six months for the implementation of these recommendations.

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