Sunday, April 22, 2007


The Reserve Bank of India may put a charge on payments made by cheque. In this way, it may nudge consumers to pay their bills through electronic clearing system. So, making payments by Demand Drafts, Cheques and Pay Orders might become a bit costlier.

Banks themselves have to bear the service charges for MICR processing of cheques. In order to increase electronic modes of fund transfer, the RBI panel has suggested that banks must put charges for paper-based cheques and they should, in fact MUST adopt a differential pricing pattern for transactions conducted in a paper-based manner. The electronic clearing modes are cheaper and ensure better quality and timely work. ECSs include transactions such as with cell phones, clearing credit card dues, payment by banks to card-accepting member establishments for transactions settled through the point-of-sale (POS) terminals, etc. It also includes Internet Banking.

The group panel has suggested that large value customer transactions — of Rs 10 crore and above per transaction — should ideally be settled through the RTGS system. It would be prudent to discourage customers to settlement transactions for face values of less than Rs 10 lakhs through the RTGS system in view of the costs, including liquidity requirements, and their reduced systemic importance. For ensuring a smooth flow of funds between banks, the group has urged RBI to mandate that all major inter-bank transactions, among commercial banks having accounts with RBI, should be routed only through the real time gross settlement system.

Most of the co-operative banks and other commercial banks have not yet registered as members of the RTGS system or of the Indian Financial Network (INFINET), used for transmission of RTGS messages. Such banks can be encouraged to route their transactions through other banks that would sponsor their transactions. In respect of extension of the INFINET membership, the group feels that INFINET membership should be extended to all banks irrespective of their status. The complete should be given priority and must be completed shortly.
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