Current · Source: Reserve Bank of India · RBI/2013-14/359 · issued 06 Nov 2013 · ~2 min read
Quick answerRBI directs all NBFCs to stop accepting fresh post-dated or EMI cheques in locations with ECS/RECS debit facility, and convert existing ones to ECS mandates by December 31, 2013. Only CTS-2010 compliant cheques allowed where ECS is unavailable.
The rule, in the simplest words
NBFCs (companies that give loans but are not banks) must stop taking new post-dated or EMI cheques (cheques for monthly payments) in places where ECS (electronic money transfer from a customer's bank account) is available.
All old post-dated or EMI cheques in those places must be changed to ECS mandates (permission to take money automatically) by December 31, 2013.
In places without ECS, NBFCs can only take cheques that follow the CTS-2010 standard (a special format for cheques).
ECS mandates have the same legal power as cheques, so NBFCs do not need extra cheques from customers.
NBFCs must update their systems and train staff to use electronic payments instead of paper cheques.
How it plays out — a real example
An NBFC compliance officer in Indore, Priya, used to collect post-dated cheques from customers for monthly repayments. After this rule, she stops taking new cheques and calls each customer to get their ECS mandate signed. By December 31, 2013, she converts all old cheques to ECS, so payments happen automatically from customers' bank accounts, saving her time and reducing cheque-clearing delays.
What changed
RBI reinforced earlier advice by mandating that NBFCs must not accept any new post-dated or EMI cheques—whether old or CTS-2010 format—in areas where ECS/RECS debit is available. Existing PDCs in those locations must be replaced with ECS mandates by end-December 2013. In locations without ECS, only CTS-2010 standard cheques are permitted.
What it means for you
NBFCs must accelerate digitisation of loan repayments, reducing reliance on physical cheques. This cuts operational costs and delays from cheque clearing, especially as non-CTS cheques face longer clearing cycles from January 2014. The legal protection under the Payment and Settlement Systems Act for electronic mandates equals that of cheques, so no extra cheques are needed.
What you must do
Identify all locations where ECS/RECS debit facility is available and stop accepting fresh PDCs or EMI cheques there immediately.
Convert all existing PDCs/EMI cheques in those locations into ECS debit mandates by December 31, 2013.
Ensure only CTS-2010 compliant cheques are obtained in locations without ECS/RECS facility.
Update internal systems and customer communication to reflect the shift to electronic mandates.
Train collection staff on the legal equivalence of ECS mandates under the Payment and Settlement Systems Act.
Who it affects
All NBFCs accepting post-dated or EMI cheques, Customers of NBFCs in ECS-enabled locations, Operations and collections teams at NBFCs, Compliance departments at NBFCs
❓ Common questions
What happens if we continue accepting PDCs in ECS-enabled locations after December 31, 2013?
RBI's directive is mandatory; non-compliance may invite regulatory action. The circular explicitly states no fresh PDCs should be accepted in such locations, and existing ones must be converted to ECS mandates by that date.
Are ECS mandates legally as strong as cheques for dishonour cases?
Yes. Section 25 of the Payment and Settlement Systems Act, 2007 provides the same rights and remedies for dishonour of electronic fund transfer instructions due to insufficient funds as Section 138 of the Negotiable Instruments Act, 1881 does for cheques.
Can we still take additional cheques along with ECS mandates for safety?
No. The circular explicitly states there is no need for NBFCs to take additional cheques from customers if they already have an ECS debit mandate. Doing so would violate the directive.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/359
DNBS.PD/ CC.NO.359 /03.10.001/2013-14
November 06, 2013
All NBFCs
Dear Sirs,
Migration of Post-dated cheques (PDC)/Equated Monthly Installment (EMI) Cheques to Electronic Clearing Service (Debit)
A reference is invited to our Circular No DNBS.PD/ CC.NO.316 /03.10.001/2012-13 December 20, 2012 advising all NBFCs to ensure replacement of all Non-CTS-2010 standard compliant cheques received from their customers for future EMI payments by March 31, 2013.
2. Reference is also invited to the circular issued by our Department of Payment and Settlement System ( DPSS.CO.CHD.No 133/04.07.05/2013-14 dated July 16, 2013 ) wherein it has been indicated that cheques not complying with CTS-2010 standard will be cleared at less frequent intervals with effect from January 1, 2014 (thrice a week up to April 30, 2014, twice a week up to October 31, 2014 and weekly once from November 1, 2014 onwards).
3. Considering the above and with a view to avoid delays in realization of non-CTS-2010 cheques, all NBFCs have been advised
a) to migrate towards accepting only CTS-2010 standard cheques
b) Not to accept fresh/ additional Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) in locations where the facility of ECS/RECS (Debit) is available. The existing PDCs/EMI cheques in such locations may be converted into ECS/RECS (Debit) by obtaining fresh ECS (Debit) mandates. This exercise shall be completed not later than December 31, 2013.
4. Considering the protection available under Section 25 of the Payment and Settlement Systems Act, 2007 which accords the same rights and remedies to the payee (beneficiary) against dishonor of electronic funds transfer instructions under insufficiency of funds as are available under Section 138 of the Negotiable Instruments Act, 1881, there is no need for NBFCs to take additional cheques, if any, from customers in addition to ECS (Debit) mandates. Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS/RECS is not available.
5. The above instructions are issued in terms of Section 45 JA and 45K of the Reserve Bank of India Act, 1934 (Act 2 of 1934).
Yours faithfully
(N. S. Vishwanathan)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/359 · issued 06 Nov 2013. The plain-English explanation above is BankPulse’s own independent summary.
Train collection staff on the legal equivalence of ECS mandates under the Payment and Settlement Systems Act.
💻 IT / Systems
Update internal systems and customer communication to reflect the shift to electronic mandates.
📜 Compliance
Identify all locations where ECS/RECS debit facility is available and stop accepting fresh PDCs or EMI cheques there immediately.
Convert all existing PDCs/EMI cheques in those locations into ECS debit mandates by December 31, 2013.
Ensure only CTS-2010 compliant cheques are obtained in locations without ECS/RECS facility.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All NBFCs accepting post-dated or EMI cheques, Customers of NBFCs in ECS-enabled locations, Operations and collections teams at NBFCs, Compliance departments at NBFCs), your first concrete step on “NBFCs must shift from PDCs to ECS debit mandates” is: “Identify all locations where ECS/RECS debit facility is available and stop accepting fresh PDCs or EMI cheques there immediately.” (RBI issued this 06 Nov 2013).
Circular: RBI/2013-14/359 -- NBFCs must shift from PDCs to ECS debit mandates
Issued: 06 Nov 2013
Action required: Identify all locations where ECS/RECS debit facility is available and stop accepting fresh PDCs or EMI cheques there immediately.
Action required: Convert all existing PDCs/EMI cheques in those locations into ECS debit mandates by December 31, 2013.
Action required: Ensure only CTS-2010 compliant cheques are obtained in locations without ECS/RECS facility.
Action required: Update internal systems and customer communication to reflect the shift to electronic mandates.
Action required: Train collection staff on the legal equivalence of ECS mandates under the Payment and Settlement Systems Act.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8555&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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