Auto and home loan borrowers need not pay post dated cheques towards EMIs as RBI has directed banks to collect monthly instalments through electronic mode wherever the facility for such fund transfer is available.
Banks are advised that no fresh or additional post dated cheques (PDC) or Equated Monthly Instalment (EMI) cheques shall be accepted at locations where Electronic Clearance Service (ECS) is available, RBI said in a notification.
“The existing cheques in such locations may be converted into ECS by obtaining fresh ECS (Debit) mandates,” it said.
The move is aimed at cutting usage of cheques and promoting electronic transfer. It will also save borrowers the efforts of going to branch for collection of cheque books.
The notification also said that ECS also accords the same rights and remedies to the payee against dishonour of electronic funds transfer instructions under insufficiency of funds as are available under Section 138 of the Negotiable Instruments Act, 1881.
“Considering the protection available, there is no need for banks to take additional cheques, if any, from customers in addition to ECS (Debit) mandates,” it said.
Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS is not available, it added.
more @ http://zeenews.india.com/business/news/finance/rbi-directs-banks-to-collect-emis-through-electronic-transfers_80545.html
Relevant RBI Circular:
Migration of Post-dated cheques (PDC)/Equated Monthly Instalment (EMI) Cheques to Electronic Clearing Service (Debit)
RBI/2013-14/158
DPSS.CO.CHD.No./209/04.07.05/2013-14
July 24, 2013
The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks/Local Area Banks
Madam / Dear Sir
Migration of Post-dated cheques (PDC)/Equated Monthly Instalment (EMI) Cheques to Electronic Clearing Service (Debit)
We invite a reference to our circular DPSS.CO.CHD.No.1622/04.07.05/2012-13 dated March 18, 2013 wherein all lending banks have been advised not to accept any fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques in locations where the facility of ECS/RECS (Debit) is available and convert existing cheques in such locations into ECS/RECS (Debit) by obtaining fresh mandates.
2. However, instances of banks obtaining fresh cheques (both CTS-2010 and non CTS-2010 standard) in locations where the facility of ECS/RECS is available have been brought to our notice, thus necessitating a reiteration of our earlier instructions in this regard.
3. Accordingly, banks are advised to adhere to the following instructions with immediate effect:
No fresh/additional Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted 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.
As indicated in our circular DPSS.CO.PD.No.497/02.12.004/2011-12 dated September 21, 2011, Section 25 of the Payment and Settlement Systems Act, 2007 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. Considering the protection available, there is no need for banks 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.
4. The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).
5. Please acknowledge receipt.
Yours faithfully
(Vijay Chugh)
Chief General Manager
@ http://rbi.org.in/Scripts/NotificationUser.aspx?Mode=0&Id=8267
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