What changed
RBI issued a circular on January 20, 2009, directing all Primary (Urban) Co-operative Banks to comply with the National Consumer Dispute Redressal Commission's order in Case No. 82 of 2006. The order sets specific timelines for cheque collection: local cheques must be credited or debited on the same day or next day, and outstation cheques within 7, 10, or 14 days depending on location. Delays beyond these periods require banks to pay interest at the fixed deposit rate or a specified rate from their Cheque Collection Policy.
What it means for you
UCBs must now strictly adhere to these outer limits for cheque clearing, reducing float and improving customer service. Non-compliance could lead to consumer complaints and financial penalties. Banks need to update their Cheque Collection Policies to reflect these timelines and ensure interest payment mechanisms are in place for delayed collections.
What you must do
- Update your Cheque Collection Policy to align with the prescribed timelines: local cheques same/next day, outstation cheques 7/10/14 days.
- Ensure interest at FD rate is paid automatically for any delay beyond these periods, as per policy or default rate.
- Display the collection timelines and interest terms prominently on notice boards in every branch.
- Submit the revised Cheque Collection Policy to RBI's Department of Payment and Settlement Systems for confirmation before implementation.
- Acknowledge receipt of this circular to your respective Regional Office.
Who it affects
All Primary (Urban) Co-operative Banks, Customers depositing local and outstation cheques, Bank branches handling cheque collection
What is the timeline for local cheque collection under this circular?
Local cheques must be credited or debited on the same day or at most the next day.
What interest rate applies if outstation cheque collection is delayed?
Interest at the fixed deposit rate for the corresponding maturity, or a specified rate per the bank's Cheque Collection Policy, must be paid to the payee.
Do UCBs have to accept outstation cheques from customers?
Yes, the circular states that UCBs shall not decline to accept outstation cheques deposited by their customers for collection.