Cheque payments to get costlier from tomorrow

Making payments through cheques may become a costlier affair from tomorrow, as the Reserve Bank of India (RBI) has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques.

As per an RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh.

At present, the RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh.

However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.

Speed clearing refers to processing of outstation cheques electronically and without movement of cheques from the presentation centre (city where the cheque is presented) to drawee centre (city where the cheque is payable).

For normal local clearing also, drawee bank can charge up to Rs 1.50 per cheque from tomorrow, as against Re 1 at present. For local clearing through cheque truncation system, which works electronically by processing the scanned image of the cheque, drawee bank can levy a service charge of Re 1 from tomorrow, up from 50 paise at present.

Besides, RBI has also given a free hand to the banks to decide on the service charge on outstation cheques of over Rs one lakh, as against a maximum limit of Rs 150 per cheque allowed currently.

However, the central bank has decided to lower the service charge for outstation cheques up to Rs 5,000, by allowing a levy of Rs 25, as against Rs 50 currently.

The outstation cheques between Rs 5,000 and Rs 10,000 would continue to attract a fee of Rs 50, while those between Rs 10,000 and Rs 1 lakh would also continue to be levied a charge of Rs 100.

While fixing service charges not mandated herein, banks have been told to get approval from their boards for service charge structure.

"Charges fixed should be reasonable and computed on a cost-plus-basis and not as an arbitrary percentage of the value of the instrument. The service charges-structure should not be open ended and should clearly specify the maximum charges that would be levied on customers including charges if any, payable to other banks," RBI has told the banks.

The service charges by banks should be inclusive of all charges (postal, courier, handling, etc.) other than service tax, it said.