What changed
RBI observed banks charging customers for cheque returns even when the customer was not at fault, and delaying re-presentation of cheques returned for technical reasons. To fix this, RBI now requires banks to levy return charges only when the customer is responsible, and to re-present eligible cheques in the next clearing cycle within 24 hours (excluding holidays), notifying customers via SMS or email.
What it means for you
Banks must immediately revise their Cheque Collection Policies to align with these rules, ensuring fair charging and faster re-presentation. This reduces customer grievances and operational risks, but requires system updates for timely re-presentation and notification. Non-compliance could invite regulatory action under the Payment and Settlement Systems Act.
What you must do
- Update your Cheque Collection Policy to specify that return charges apply only when the customer is at fault, using the RBI's illustrative list of non-fault reasons.
- Ensure systems re-present technical return cheques in the next clearing cycle within 24 hours (excluding holidays) without requiring customer action.
- Set up automated SMS/email alerts to notify customers whenever a cheque is re-presented after a technical return.
- Communicate the revised policy to all branches and customers through notices and digital channels.
- Acknowledge receipt of this circular and confirm compliance to RBI.
Who it affects
All Scheduled Commercial Banks including RRBs and Local Area Banks, Urban Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks
What qualifies as a 'technical return' where the customer is not at fault?
RBI provides an illustrative list including reasons like mutilated instrument, image not clear, clearing stamp missing, crossed to two banks, or advice not received. The full list is in the circular's annex.
What is the timeline for re-presenting a technical return cheque?
Banks must re-present such cheques in the immediate next presentation clearing, within 24 hours excluding holidays, and notify the customer via SMS or email.
Can banks still charge for cheque returns in any case?
Yes, but only when the customer is at fault. For technical returns where the customer is not responsible, no charge can be levied.