Dealing with incidents of frequent dishonour of cheques

Reserve Bank of Inda, Department of Banking Operations and

Development, vide paragraph 15.4 of our Master Circular
DBOD.No.Leg.BC.9/ 09.07.006/2009-10 dated July 1, 2009 on
Customer Service has advised Banks to take certain steps for
dealing with incidents of frequent dishonour of cheques of Rs. 1
crore and above.

Now vide Lr.No. RBI/2009-10/213 DBOD.No.Leg.BC.59 /

09.07.005/2009-10, dt November 9, 2009, addressed to All
Scheduled Commercial Banks (Excluding RRBs), has advised Banks
to have a Board approved policy for dealing with frequent
dishonor of cheques of value of less than Rs. 1 crore. Reserve
Bank of India is clear that this policy should also deal with
matters relating to frequent dishonor of ECS mandates.

This complete Notification can be accessed @

http://www.rbi.org.in/scripts/NotificationUser.aspx?
Id=5353&Mode=0

Basically, Post Dated Cheques/ECS Debit Mandates issued for

Loan Re-payments, cannot be shifted to ePayments (RTGS or
NEFT)

In case customers issue cheques to Government Agencies, Utility

Providers, customers ensure sufficient funds are available in the
account, to clear such cheques.
However, Banks and other stake-holders should explore if
Cheques issued for other than the above mentioned two
categories, can be shifted to ePayments.

This will reduce the number of frequent dishonor of cheques,

leading to few cases to deal with, which in turn will increase the
operational efficiency of the Banks.