Apex bank check on cheque

Mumbai, Jan. 31: The RBI is planning to limit the number of free cheque books issued by banks and charge moderate to high fees if customers request for more. High withdrawals and deposits through cheques may also be charged.

These are some of the suggestions made by the Reserve Bank of India in a discussion paper released today to discourage the use of cheques both by individuals and companies.

At present, banks provide 20�50 cheque leaves to savings bank customers free, either on a quarterly or on an annual basis. Some banks do not provide any free cheque books, while a few provide free cheque books every quarter. Beyond this, the charges levied range from Rs 2 to Rs 3 per leaf.

The RBI has recommended that free cheque books should be kept to a minimum number on a per annum basis, and the charges for exceeding the limit may range from moderate to steep, depending on the history of the customer.

According to the apex bank, one of the reason for cheques becoming a low-cost method of making payments is that the issuer did not bear any charges for issuing a cheque.

"This aspect merits some review whereby the drawer is made to bear some charges when cheques are issued," the central bank said, adding that there is a case for fixing the limit on the value of the cheques.

The charges may be levied at the time of payment and may be higher than the fee on electronic payments. At present, banks charge Rs 2.50-Rs 25 on electronic fund transfers.

The central bank may also look at the possibility of imposing charges on high withdrawals and deposits by cash.

For corporates and institutional customers, who are the largest users of cheques, the access to cheque books should be made costlier.

Provisioning norm

The RBI today proposed that banks would have to set aside higher amounts for restructured accounts from next year.

In its draft guidelines on the restructuring of advances by banks and financial institutions, the RBI suggested that provisions on such accounts be raised to 3.75 per cent from March 31, 2014, and thereafter to 5 per cent in the following year. In October last year, the apex bank increased the provisioning against such loans to 2.75 per cent from 2 per cent.

Last year, a panel had suggested that provisioning on restructured loans be raised in phases to 5 per cent.

The RBI accepted the recommendations of the panel, proposing that promoters should bring in at least 15 per cent of banks' sacrifice, or 2 per cent of the restructured debt, whichever is higher.

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