RBI panel prefers e-transactions

A Reserve Bank of India (RBI) panel has suggested that banks start levying a charge on clearing of cheques to expedite the switch to electronic transfer of funds.

At the same time, it said they should use free internet-based transactions as the proverbial carrot for the customers.

Currently, the cost of processing cheques is borne by the banks.

They might have to educate their customers on the need to shift to electronic processing, and in case cheques were used, processing charges might be passed on to the customers, the report said.

The panel has also recommended that banks should be prohibited from using real-time gross settlement (RTGS) system for transactions below Rs 10 lakh and for regular and repetitive payments such as salaries.

It said that repetitive payjments should be routed through electronic clearing service (ECS)/ National Electronic Funds Transfer (NEFT). The panel has also prepared a roadmap to shift from paper-based transactions to electronic payments.

The electronic fund transfer may also be made cheaper as an incentive.

To begin with, ECS-based transactions could be made free for three years. The legal protection available for cheque transaction should also be extended to electronic funds transfer.

For certain transactions, such as reimbursement of credit card dues, payments should not be made through paper-based cheques.

Instead, ECS-based transaction settlement (including facility by Billjunction, Billpay) should be used for these transactions. Similarly, mobile phone payments should be made through the electronic route.

On moving large value transactions to the electronic platform, the group said, the central bank could make it mandatory that all major inter-bank transactions among commercial banks having accounts with the central bank were routed only through the real-time gross settlement (RTGS) from September.

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PANELSPEAK

Banks should offer free net-based transactions as incentives

Banks should also be prohibited from using real-time gross settlement system for transactions below Rs 10 lakh and for regular and repetitive payments such as salaries.