Cheque it out

 
Source : Money Today ,Sushmita Choudhury

Despite the widely touted explosion in online banking, clearing houses in the country processed an average of 4.5 million cheques per day between April and December 2009. While at par cheques might seem the norm, for a majority of Indians it is a paid privilege.


Though leading private sector banks offer free multi-city cheque books, most public sector players charge Rs 3-5 per leaf for it to be treated like a local cheque across the country. So, when you deposit an outstation cheque, one that is drawn on a bank branch located in another city, it translates to a 7-14-day clearing cycle, much longer than that for a local cheque.

Besides, it incurs additional charges ranging from Rs 40-150, depending on the cheque amount. Not fair, right? This is why the RBI introduced the Speed Clearing System (SCS), which has cut the time taken for clearing outstation cheques to less than 48 hours.

How does the SCS work?

Typically, when a person deposits an outstation cheque, his bank branch sends it for collection to the city where it is payable. It can also be paid through the national clearing facility, wherein the clearing houses managed by the RBI provide an inter-city cheque collection service to member banks. Both these options are, predictably, time-consuming.

The speed clearing system leverages on the centralisation of banking operations made possible through core banking solutions (CBS). This obviates the need for the physical movement of cheques. Under this system, cheques payable at a CBS-enabled branch anywhere in India are realised through local clearing. Hence, the time taken to process outstation cheques is similar to that for a local cheque. However, SCS is currently available at 66 centres that use the magnetic ink character recognition technology.

What are the applicable charges?

Speed clearing is a free facility for cheques up to Rs 1 lakh. For higher amounts, banks cannot charge more than Rs 150 per cheque, excluding service tax, according to the RBI. This charge is inclusive of all courier/postage charges, infrastructure costs and the like.

How can I know whether a cheque is eligible for this facility?

While many banks stamp or print ‘CBS’ on the cheque leaves that can be sent for SCS, customers should not rely on this alone. Typically, cheques having transaction codes 10, 11 and 13, which are drawn on CBSenabled bank branches, are eligible for the SCS. The transaction code comprises the last two digits at the bottom of the cheque leaf, except in the case of government cheques drawn on the RBI, which have a three-digit code. For a comprehensive list of banks, visit www.rbi.org.in/ Scripts/bs_viewcontent.aspx?Id=2016.

Is SCS the same as the high-value clearing facility?

High-value clearing is limited to instruments with a face value of Rs 10 lakh and above (till 2009, the limit was Rs 1 lakh). Provided that the cheque is deposited with the clearing house within the specified cut-off time, customers can withdraw the money on the second day itself. SCS has no such ceiling.