Banks to collect EMIs through electronic transfers: RBI

India Infoline News Service | Mumbai |

The objective is to reduce the usage of cheques and promote electronic transfer

The Reserve Bank of India (RBI) advised banks that no fresh or additional post dated cheques (PDC) or equated monthly instalment (EMI) cheques should be accepted at locations where electronic clearance service (ECS) is available.

“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, the RBI said in a notification on Wednesday.

The objective is to reduce the usage of cheques and promote electronic transfer. Thus, auto and home loan borrowers need not pay post dated cheques towards EMIs.
Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS/RECS is not available, it added.

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. 


 

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