The Reserve Bank of India (RBI) wants to bring down cheque transactions in the economy significantly by disincentivising it through various measures and simultaneously encouraging electronic transactions, according to a discussion paper by the central bank.
“The role of cheque has to reduce significantly while electronic payments grow significantly,” the paper said.
In the paper, RBI had proposed banks must charge customers for issuance of cheque books and transaction amounts must be limited.
“Such charges may be levied on an ad-valorem basis at par with charges applicable in electronic payment systems as if the drawer had originated such payments through electronic mode,” the paper said.
Noting that cheque transactions have remained high in the economy even though electronic mode of payment has increased manifold, RBI paper suggested that customers be divided into three categories, individuals, government departments and institutions, and charges levied accordingly.
The paper said despite electronic transactions growing 30% every year over the last five years, cheques still account for about 50% of total transactions and most of these are below R1 lakh.
However, in value terms, electronic transactions have a share of over 90%, the paper said. RBI mandates transactions above R10 lakh to be compulsorily electronic in nature.
The discussion paper said in discouraging cheque transactions, care must be taken that such transactions do not turn into cash transactions and instead become electronic.
“It is understood there are certain segments of corporate users who are large depositors and users of cash, and as such these cash transactions in current accounts need to be discouraged/charged heavily,” the paper said.
The paper said RBI could mandate all institutions to compulsorily transact electronically from their current accounts.