Krishnan was visibly upset over the inordinate delay in encashment of a demand draft issued by a bank. “It is close to a week since I presented the instrument, but the said amount is still not reflected in my account statement,” Krishnan told this correspondent, clearly ignorant of the cause for the delay. Enquiries reveal that issue of non-CTS (Cheque Truncation System) compliant demand drafts by banks pose a lot of hardship, especially delay in encashment of the instrument.

And this, a cross-section of bankers admit, is continuing to happen even after two years of RBI’s instructions to banks to phase out such instruments.

Preferring anonymity, the Chief Manager of a public sector bank conceded that rural and semi-urban branches continued to issue non-CTS drafts, while the urban branches have done away with the issue of non-CTS compliant instruments since the beginning of this fiscal. Cheque truncation obviates the need to move the physical instrument across branches. In its place an electronic image of the cheque is transmitted to the branch concerned through the clearing house, along with relevant information.

Demanding RBI’s immediate intervention in this regard, the Secretary of Coimbatore Consumer Cause, K Kathirmathiyon, pointed out that the RBI had issued instructions to banks in 2012 to issue only CTS-2010 compliant cheque books, demand drafts and pay orders and not charge the customer for issuing CTS compliant cheque books for the first time.

Curbs on clearing

Further, to discourage presentation of non-CTS instruments, the RBI had, towards the end of last year, imposed restrictions on clearing of such instruments. They were cleared thrice a week during the first four months of this calendar year (January 1-April 30, 2014); this was reduced to twice a week (Monday and Friday) between May and October, and from November 1 onwards, down to once a week (Monday only and before 11 am).

If one presents a non-CTS demand draft on, say, Monday, it will be sent for clearing only the following Monday and proceeds credited to the payee's account on Tuesday or Wednesday, taking nearly 10 days to en-cash the draft for no fault of the customer.

“Some of the branches of banks want to exhaust non-CTS demand drafts,” the Consumer Cause Secretary said, adding that this tantamounts to deficiency in service.

“Since these are issued against the regulator’s instructions, the customer can demand compensation and claim damages from the bank that issued the non-CTS draft/pay order. It is a serious issue. The RBI should take action against such erring banks in the interest of the public,” Kathirmathiyon said.

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