High-value cheques now attract greater scrutiny

Puneet has received his home loan disbursement as che-que from the housing finance company. He deposited it in his savings bank account for clearance. But the delay in getting the cheque cleared alarmed him. When he inquired with the bank, he came to know that the bank had contacted him over phone to know the source of funds and for verification, but as his phone was not being answered, they kept it on hold and waited until he cleared it.

Have you ever had a similar experience Or have you wondered why you are getting calls from the bank before clearing any high value cheque issued by you, or before releasing money cleared in your account.

The security guidelines of the Reserve Bank of India made it mandatory for banks to complete due diligence of high value cheque transactions. Such cheques will not be cleared unless the bank confirms the amount and source of fund from the person issuing the cheque and receiving the funds.

High-value cheque transaction Various banks have their own yardsticks to consider an amount as a high value transaction. Usually cheques above Rs 10 lakh are considered to be high value transactions on an average.

As per guidelines, all cheques above Rs 2 lakh are to be examined under an ultra violet lamp at the time of clearing and cheques above Rs 5 lakh will have to undergo checks at multiple points before clearance.

Therefore, depending on your bank and the amount of the issued cheque, expect a phone call from the bank before the cheque is forwarded to the clearing house. If you are receiving a high value fund, the confirmation call may be initiated after clearance and before depositing it in your account.

RBI has issued this guideline mainly because of two reasons:

To prevent cheque fraud There have been several instances where duplicate cheques with the same series as that the customer is having, coming for clearance, while the actual cheque is with the customer. This happens if someone, who knows your banking details, duplicated your cheque leaf to get money from your account. It also happens if cheque leaves are leaked over courier or through any other. The new system of getting confirmation of the cheque issuer will prevent this.

Banks have also been told to exercise due care while handling the movement of cheques over the counters.

To curb black money Tougher anti-money laundering regulations will make it mandatory for banks to keep records of all money transactions. Branch operations managers of the base branch will have to present timely reports of all high value cheque clearance taking place from the branch, which will help the government to put an effective check on black money transactions.

Checking source of funds for cheques Here is a snapshot of things that you should know when issuing a high value cheque for clearing.

You will get a call from the base branch before initiating clearance of a high value cheque issued by you, or before receiving a high value cheque payment som-eone issued against your account.

Some banks ask for confirmation for transactions above Rs 2 lakhs, but mostly the critical limit is Rs 5 lakh and above.

Both the sender and the receiver should be KYC compliant.

RBI has issued guidelines that all banks must strictly use Cheque Truncation System (CTS) 2010 compliant cheques which are difficult to duplicate. Therefore, before issuing or receiving any cheque, ensure that it is CTS compliant.

Before issuing or depositing a cheque, check with your bank on the limit over which a cheque is considered high value transaction.

Do not issue high value cheques when you are traveling. Make sure you are available for any confirmation from the bank either by phone or in person.

If you have recently opened a new bank account and plan to issue a high value transaction through cheque, make sure that your bank has details of your source of funds. For new account holders, banks will be more vigilant about KYC norms as well as the transaction patterns for risk categorisation.

To avoid your cheque being put up for unwanted scrutiny, instead of issuing one big cheque, you can divide the payments into smaller cheques for easier and faster clearance.

RBI guidelines on cheque clearance are only for your own security. While these may mean a little inconvenience, the security measures being adopted are helpful in the long run.

The writer is the CEO of BankBazaar.com