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Double-quick credit for outstation cheques

RBI has doubled the ceiling for immediate credit towards outstation and local cheques. The earlier limit was laid down through RBI's circular DBOD No.BC.181 / 09.07.007 / 99-2000 dated May 29, 2000 which had advised banks to afford immediate credit up to the value of Rs 7,500 in respect of outstation and local cheque tendered for collection by customers. Now, the ceiling has been raised to Rs 15,000, based on the recommendation of the Indian Banks' Association (IBA).

However, as per the extant instructions, banks are required to observe the following guidelines: Normal collection charges may be recovered in case of outstation cheques and a charge of Rs 5 may be recovered for local cheques; the bank should be satisfied about the proper conduct of the account of customer; and the bank may extend the facility to all individual depositors without making a distinction about their status, i.e. savings bank, current or cash credit account; the banks should not lay any separate stipulation for minimum balance for extending the facility.

The facility is also to be allowed to the customers at the bank's extension counters subject to the usual precautions taken by banks in this regard. While immediate credit of cheque will amount to grant of advance, non-charging of interest on such cheque of the face value up to Rs15, 000 will not be viewed as violation of RBI's directive on interest rates on advances. In case where the instrument of face value exceeding Rs15, 000 is received for clearing and the proceeds of the instrument are credited to the account, in whatever manner, in advance of the date of actual realisation of the amount, interest at the stipulated rate (in addition to the usual service charges prescribed by the bank), shall also be charged for the period for which outlay of funds is involved.

If the cheque gets returned unpaid, the bank can recover interest in conformity with the applicable interest rate directive of RBI for the period the bank is out of funds. But no interest is to be charged to the customer for the period between the date of credit of the outstation cheque lodged and its return. Banks may charge interest from the date of return of the cheque till the reimbursement of money to the bank. Where the cheque is credited to a savings bank account, no interest will be payable on the amount so credited if the cheque is returned unpaid.

To alert the customers, the banks may consider introducing different pay-in-slips superimposing a notice to the effect that in the event of dishonour of the cheque, the customer will have to pay interest for the period the bank is out of funds at the normal rate.

Soon, there would also be notices regarding the availability of facility prominently displayed at each branch. (DBOD No Leg BC 21 / 09.07.007 / 2002-03 dated August 23, 2002)

D. Murali

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