Skip to main content

You can no longer cancel a wrong entry in a cheque, make a correction and sign next to it

A small change that will be visible in the coming days will impact the way Indians handle bank cheques. The Reserve Bank of India (RBI) has changed the rules for permissible alterations on cheques. Several banks have already begun informing their customers about bringing this change into effect soon.

Cheques are instruments used for making and receiving payments and used by individuals and corporate entities. Their use is widespread and constitutes an important part of bank dealings for people.

If there is a mistake made while writing the details on the cheque, an individual currently makes the necessary change on it. To confirm the change has been made by the right person and is not a fraud, the account holder/s then sign where the change has been made. This has been accepted over the years.

CHANGE

But, this will change. To standardise and enhance security features in a cheque form, the RBI came out with a benchmark prescription called 'CTS-2010 Standard' this February. Among the various points mentioned, RBI has clearly mentioned prohibiting changes and alterations on cheques.

The important thing is that any alteration on cheques, except for validation of dates (that, too, if required) cannot be made. This would mean the old process of signing after making the change would no longer work; a new cheque would have to be made. This is expected to help banks in controlling fraud, as no change would be permitted in areas like the name of the payee, amount of cheque in words and figures and so on. For example, if you are writing a cheque in the name of Amit but you write Amti, then you need a new cheque. The name on the cheque cannot be crossed out and the right one written. Similarly, Rs 5,000 written as Rs 50,000 would require a new cheque, with the figures tallying. This is a big change set in motion and banks have been given time for its implementation. They are in the process of intimating their customers about it.

IMPACT

The first impact of the change is that individuals will have to change the manner in which they operate and deal with cheques. Even a small mistake will make the cheque unusable. All details have to be mentioned correctly.

The other angle that will arise is cost. Making a mistake is fine, but where the bank is charging for the cheques, this will entail an additional cost. True, the cost will not be high but if there are lots of mistakes, the total cost would rise. If a bank is charging Rs 100-200 for a 50-cheque booklet, several cheques wasted means expense incurred.

There is a second cost angle. If there is a mistake and the cheque is put into the system with the change and then this is rejected by a bank, another problem will arise. There are heavy penalties for a returned cheque and this could run into anything from Rs 250-750. Even if you are not the person who issued the cheque, a return can lead to a penalty for you, too. A silly mistake can lead to a financial impact, as well as the loss of face or credibility that would arise when such a cheque goes back unpaid.

The manner of operation for the individual will also change, in the sense that they will always have to be ready in case something goes wrong. Say, for example, you go to pay a bill for Rs 540 and then you realise it is for Rs 560. Today, if you are the account holder, you make the change on the cheque with you and sign; the process is smooth and easy to achieve. However, in the future, even if you are the account holder, this will not work and what you will be required to do is to carry additional cheques.

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now