Don't accept PDCs for EMI payments where ECS is available: RBI

Asks banks to issue first cheques under CTS 2010 free of cost

In a effort to give electronics payments a push Reserve Bank of India (RBI) today asked banks not to accept post dated cheques (PDCs) and EMI payment cheques even if it conforms to new CTS -2010 (Cheque Truncation System) format  on the locations electronic clearing system (ECS) debit is available.

This means all the new borrowers where ECS facility is available will have to compulsorily shift to electronic payments systems and they can’t sign post dated cheques and give them to banks for encashment.

Central bank in its order also said that the banks should make all efforts to convert existing PDCs to ECS system by obtaining fresh mandate from the borrowers however it hasn’t specified any time frame for such conversion.   

A senior public sector banker said, “there are many places where infrastructure (ECS) is getting ready though they are on core banking solutions (CBS) platform.”

RBI therefore had clearly mentioned the centres which such facility should accept e-payments, he said adding that RBI wants such centers to enable ECS as soon as possible.       

This step is seen in RBI’s thrust to promote electronic payments in the country. H R Khan, deputy governor in his speech at Bancon in November 2012 had said, “the payment system vision document: 2012-15 of the Reserve Bank envisages to proactively encourage electronic payment systems for ushering in a less-cash society in India.”

Regulations would enable channelising innovations and competition to meet these demands consistent with international standards and best practices Khan had said adding overall regulatory policy stance would be oriented towards promoting a less-cash/less-paper society, in a way a “green” initiative.

In the same order RBI also extended time withdrawal of non CTS cheques by another four months up to July 2013. Such cheques would continue to be valid till July.  However RBI will review the progress in the month of June indicating it might again extend the deadline if needed. Earlier RBI extended the deadline from December 2012 to March 2013.

RBI said that the banks shouldn’t charge customers for the first cheque book issued under CTS -2010 format and the banks may continue with their existing policies in compliance with fair practices code for cheques issued afterwards.    

Experts say e-payments are more safe, secure and cost effective for banks as well as customers.