RBI paper for charges on cash withdrawals

If the Reserve Bank of India (RBI) has its way, frequently issuing cheques or withdrawing cash at bank branches could cost you. The central bank’s efforts to reduce the volume of cash transactions, an objective under its “Vision Document for Payment and Settlement Systems (2012-2015)”, advocates a calibrated approach towards a “less-cash” regime and greater adoption of electronic modes of payments.

A discussion paper put up on the bank’s website on Thursday suggested a series of measures for both individuals and institutions. For individuals, the paper suggested that free cheques should be kept to a “minimum number” annually, beyond which banks should be at liberty to levy charges on additional cheques issued, depending on “cheque usage history of the customer”.

In case of fresh loans, the RBI has suggested that acceptance of post-dated cheques (PDCs) be stopped completely and repayments done only through electronic channels, with suitable conditions for late payment and non-payments being disclosed upfront. For existing PDCs, it has suggested that switching to electronic payment mechanisms should be within a prescribed timeframe. Similarly, credit card dues should be paid electronically; if they are paid through cheques, “convenience charge” may be levied by the issuing bank after giving the card holder due notice.

To avoid the tendency to resort to cash-based transactions, the paper suggests that cash withdrawals and deposits by individuals may also be charged. It, however, said it should be implemented after due research.
For corporate customers constituting 54 to 64 per cent of total cheques processed in India, the RBI has said that access to cheque books should be made costlier. Further, in the case of educational institutions and public utility companies, the practice of levying “convenience fees” from those paying electronically should be stopped, the paper said.