What changed
Earlier, RBI prescribed uniform rules for immediate credit up to Rs 7,500, specific collection timelines, and interest on delays. Now, RBI has advised each scheduled UCB to formulate its own comprehensive, transparent policy covering all three aspects, based on its technological capabilities and systems.
What it means for you
Banks gain flexibility to design competitive cheque collection services, potentially reducing collection periods and improving customer experience. However, they must ensure full disclosure, protect small depositors, and set clear liability for delays with automatic interest compensation. Non-compliance with self-set standards will attract interest payments without customer claim.
What you must do
- Formulate a comprehensive cheque collection policy covering immediate credit, time frames, and delayed interest, aligned with your bank's tech and processes.
- Integrate this policy with your deposit policy, referencing IBA's model policy.
- Ensure the policy clearly states bank liability for delays and provides automatic interest compensation without customer claim.
- Review and upgrade collection arrangements to reduce turnaround time, especially for outstation instruments.
- Disclose the policy to customers, protecting small depositors' interests.
Who it affects
Scheduled Primary (Urban) Co-operative Banks, Chief Executive Officers of all scheduled UCBs, Customers of scheduled UCBs, especially small depositors
What was the earlier immediate credit limit for cheques?
Earlier, scheduled UCBs had to provide immediate credit for local/outstation cheques up to Rs 7,500 per individual account holder, subject to conditions like satisfactory account conduct.
What is the new requirement for delayed collection interest?
Banks must now set their own standards for collection timelines and pay interest automatically for delays beyond those standards. Earlier, RBI mandated interest at savings bank rate for delays beyond 14 days, with penal rates for abnormal delays.
Do we need to seek RBI approval for our new policy?
The circular requires banks to send a copy of the Cheque Collection Policy to the Department and endorse a copy to the Chief General Manager, RBI, Department of Payment and Settlement Systems, for perusal and confirmation before implementation.