Reserve Bank of India backs e-payments

BANGALORE, INDIA: The Reserve Bank of India (RBI) has instructed the banks not to accept post-dated cheques (PDCs) and equated monthly instalment payment cheques in those locations where electronic clearing system (ECS) is available.

This is a move by the apex Bank to encourage electronic payments. Incase, the ECS facility is available, borrowers have to shift to e-payment system. Banks have also been instructed by the RBI to convert existing PDCs to the ECS system. This needs to be done by obtaining a fresh mandate from borrowers but for such kind of conversion, the Central Bank has not specified the timeframe.

A day before this declaration, the Finance Ministry has announced its plans to move completely towards ECS for quicker and hassle free income tax refunds. Through ECS facility, institutions can make bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc, or for bulk collections of amounts towards telephone, electricity, water dues.

"The payment system vision document 2012-15 of the Reserve Bank envisages to proactively encourage electronic payment systems for ushering in a less-cash society in India," a Business Standard report quoted H R Khan, deputy governor of RBI, as saying.

According to Khan, "Regulations would enable channelising innovations and competition to meet these demands, consistent with international standards and best practices."

As per RBI's instructions, for the first cheque book issued under the CTS-2010 format, banks should not charge the customers. They (banks) should rather continue with existing policies in compliance with the fair practices code for cheques issued afterwards.