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RBI Directs Cheque Bouncer at Banks

The RBI has been animated by consumer complaints indicating extreme inconvenience

Waiting on banks to clear locally issued cheques for days would soon be a thing of the past and, as a result, the Reserve Bank of India (RBI) may just have put an extra paisa or rupee, in your account, but apart from that, it has ensured that you can have an almost immediate access to funds when your cheque gets realized on a as-soon-as-possible basis.

Roused to action by a spate of consumer complaints as well as consumer court directions, RBI has issued fresh directives to banks asking them to clear cheques quickly.

RBI, four years ago, had said banks could frame their own cheque-clearing policies. But soon enough it realized that banks tended to favour the go-slow process that suited their interests rather than those of the depositors.

Post-RBI order, banks will clear local cheques deposited with them on the same day or at the most, early next day, perhaps as soon as one hour after opening for business.

The history behind the new order is simple enough: an irate consumer filed a complaint. The RBI states as much and says that it is basing its order on a case filed before National Consumer Disputes Redressal Commission (NCDRC), New Delhi in August 2006 under the Consumer Protection Act, 1986, inviting attention to the delays in cheque clearing and, specifically, to the issue of float in local and inter-city clearing.

Admitted in public interest as Case No. 82 of 2006, the complaint had named the RBI and all Scheduled Commercial Banks as respondents and sought adequate compensation by way of interest for delay in collection.

In its subsequent notification to banks, RBI has said, "Ideally, in respect of local clearing, banks shall permit usage of the shadow credit afforded to the customer accounts immediately after closure of relative return clearing and in any case withdrawal shall be allowed on the same day or maximum within an hour of commencement of business on the next working day, subject to usual safeguards".

"As a result of this stipulation, the central bank has asked banks to frame a proper cheque-clearing policy (CCP) that has to be widely publicized, following the guidelines issued by NCDRC on August 2008.

The central bank has not only taken up the issue of local cheques but also fixed a time frame for collection of outstation ones as well. The time-frame for collection of cheques drawn on state capitals and major cities has been capped at seven days and ten days respectively. For all other locations, banks have to clear the cheque within 14 days.