The Reserve Bank of India (RBI) wants to do away with post-dated cheques (PDC) in all fresh loans. It is also debating putting a charge on cash deposits and withdrawals from banks in current accounts above certain limits.
The suggestions have been made in a discussion paper on disincentivising issuance and usage of cheque issued by the Bank on Thursday.
“Existing PDCs should be converted to electronic payment mandates within a prescribed timeline,” the RBI said in a discussion paper on disincentivising issuance and usage of cheques. “Credit card dues should be paid electronically. In case card holders make payments of card dues using cheques, then high convenience charge may be levied by the card issuing bank,” it said.
Preference of the lenders for post-dated EMI cheques rather than other electronic modes of collection under the strong belief that the lender gets protection under Negotiable Instruments Act only if the payments are made through cheques.
The RBI paper says free cheque books may be kept to a minimum number on a per annum basis. The charges levied by banks beyond this number may range from moderate to steep (slab rate) depending upon the cheque usage history of the customer. “In order to avoid increased dependence or slippage to cash-based transactions, high cash withdrawals and deposits of cash by individuals may also be charged. Implementation of this may, however, be preceded by conduct of structured research and concerted efforts at customer education,” it said.
Corporates have to also be discouraged from issuing physical interest warrants and dividend warrants. “Where such physical instruments are issued, a processing charge (for instance Rs 25 per instrument) may be levied by the paying bank when the instrument is presented for payment,” the paper said.
Similarly, cash deposits in current accounts need to be discouraged actively, the RBI paper said. It is learnt that certain segments of business are heavy users of cash which not only adds to the ‘social cost of payments’ but also adds to the cost of cash handling at banks.