India - Cheques to travel faster

By next year, you can get your outstation cheques cleared within a day. Reserve Bank of India (RBI) is set to clear an electronic process called cheque truncation system by the year-end.

Physical movement of cheques from one bank to another used to take lot of time, which will now be done away with. The new system will send scanned images of cheques through secure e-mail networks to the destination branch for verification. Banks will be able to set up these systems once the RBI clears them.

Speaking at a conclave on Indian Banking Vision 2010, V Leeladhar, Deputy Governor, RBI, said, “Over 50 banks are participating in the pilot project being implemented in the NCR (National Capital Region of Delhi). The systems may be cleared by the year-end.” The project was initiated by the RBI, a couple of years back.

Leeladhar also said that the guidelines under the Payment and Settlement Systems Act (PSSA) would be released in a week’s time.

Responding to a query relating to regulation of money transfer companies, RBI deputy governor Leeladhar said, “There is no oversight on money transfer companies like Visa, Mastercard and Western Union as of now. Once the PSS Act guidelines come into force they will come under the RBI purview.”

The Act, which brings funds transfer companies — domestic as well as international — operating in India under RBI’s regulation, was passed by the Parliament in October 2007.

The payment and settlement services provided by the RBI, which are offered free-of-cost as of now, will be available at a price after March 2009. “However, four banks have decided to offer these services free-of-cost even after the deadline of March 31, 2009,” Leeladhar said. The services are being made available to banks for five years.

RBI operates several nation-wide payment and settlement systems — Real Time Gross Settlement (RTGS), Electronic Clearance System (ECS), National Electronic Fund Transfer (NEFT) and SEFT etc. Except RTGS, all these retail clearance services will be transferred to a new non-profit entity called National Payments Corporation of India (NPCI) being set up.