Nowadays most people have a bank account. There are various types of bank accounts. Most of the common people have savings account. Many of them uses check facility for their financial transactions. The time taken for check processing varies in each case. The RBI have always been taking steps for encouraging electronic transactions. The consumers are advised to make good use of technology and core-banking system for reducing the clearing cycle and movement of check. Check can be both local and outstation. Both require various time period for clearance and their service charge also varies.
The impact of new structure
The Reserve Bank of India issued certain directions by exercising the powers conferred by Section 18 of the Payment and Settlement Systems Act, 2007 regarding service charges for check clearance.
Before going to that aspect a little knowledge of the collection of checks through bank accounts is essential.
Collection in earlier days
When you gets an outstation check, you gives it to your bank known as the presenting bank. Then the check will be sent for collection to the place where it is payable. This is called the Destination or Drawee place. The bank in the destination place is called Collecting Branch. Then after the payment the collecting bank remits the money to the Presenting branch. Then the customer's account is credited with that amount.
Speed Clearing Arrangement
Speed Clearing is the collection of outstation checks through local clearing. It uses the help of technology. Now the banks have got a specialized network called Core Banking Solutions; in short CBS. In this system the checks can be paid at any location. The process is speedier. The RBI has mandated speed clearing service for all outstation checks.
Revising of charge structure
The RBI has planned to revise its charge structure by issuing a circular in January 19, 2011. By this circular the RBI intend to change the current structure which was set up in 2008-2009 years.
The present rate is shown in the following table.
Service (Processing) Charges for Local Clearing (by Clearing Houses from Member Banks) for Checks
System | Revised Rate in Rupees | |
Presenting Bank | Drawee Bank | |
Clearing at MICR-CPCs | 1.00 | 1.50 |
Cheque Truncation | 0.50 | 1.00 |
Service Charges for Outstation Check Collection
Revised Rate in Rupees | |
Value | Service charge from Savings Account customers |
Up to and including 1,00,000 | Nil* |
Above 1,00,000 | Left to the banks to decide |
Above 10,000 and up to and including 1,00,000 | 100*^ |
Above 1,00,000 | Left to the banks to decide |
Service Charges for Check Collection under Speed Clearing (by Collecting Banks from customers
Revised Rate in Rupees | |
Value | Service charge from Savings Account customers |
Up to and including 1,00,000 | Nil* |
Above 1,00,000 | Left to the banks to decide |
The impact of new circular is that the banks will get more freedom to fix charges in large amount financial transactions. RBI only mandates that the service charges should be fair and it should be levied in a transparent manner.
The consumers will love to choose the electronic mode transactions.
Conclusion
However let us pray that the new system introduces a fair amount of transparency and efficiency in check clearances.
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