The Reserve Bank of India (RBI) has proposed to standardize the charges for clearing of outstation cheques, and make them much more affordable.

What is an Outstation Cheque? Although many banks now provide “payable at par” cheques to their savings bank account (SBA) holders, many of us still have locally payable cheques.

When such cheques are written for someone residing in another city, and are presented for clearing, they are treated as “outstation cheques”.

Banks have been charging a special fee (or clearing charges) for clearing such outstation cheques. This fee varies from bank to bank, but is usually computed as a percentage of the cheque amount.

The New Proposal by RBI

Now, the Reserve Bank of India (RBI) has proposed to standardize these charges across banks, and make them more affordable.

Here is the proposal:

• Outstation cheques up to Rs. 10,000: Rs. 25 per cheque
• Outstation cheques between Rs. 10,000 and Rs. 1 Lakh: Rs. 50 per cheque
• Outstation cheques above Rs. 1 Lakh: Rs. 100 per cheque

These would be the only charges that banks would be allowed to collect from the customers – no additional charges (like courier charges) can be levied.

What does it mean for you?

As I mentioned earlier, the charges that banks currently levy are far higher than the proposed charges. Thus, everyone would benefit by these changes! All of us would save money on clearing of outstation cheques.

But the savings would be significantly more for people writing more high-value cheques (Over Rs. 1 Lakh).

Example

The current average charge for clearing of outstation cheques is 0.4%.

Thus, for a Rs. 2 Lakhs cheque, currently you would pay Rs. 800 as the clearing charge. Compare this to the proposed charge of Rs. 100 – a saving of Rs. 700 per cheque!

And this saving would only increase as the cheque value increases!

Other articles you might be interested in:

• Definition of Residential Statuses: Resident, RNOR, NRI, PIO
• An Introduction to Islamic or Shariah Compliant Banking
• Early retirement – Why a fixed deposit (FD) is not a good choice
• Permanent Account Number (PAN) for an NRI and a PIO
• You are 30 – Think of 50: Impact of inflation on your budget
• An Introduction to Reverse Mortgage
• Home Loan / Mortgage Insurance – What to Buy, How to Buy
• Change in interest rate: Impact on floating rate home loan, EMI and tenure
• All you wanted to know about Senior Citizen Savings Scheme (SCSS)
• When “at-par” is not so good: New Fund Offer (NFO) versus existing MF schemes
• Not Cash, Not Travellers Cheques: Use Travel Card
• Once again, banks hike interest rates for deposits and lending (loans)