New Rule From August On Cheque Bounce

The Reserve Bank of India (RBI) came out with a new set of rules at the beginning of August regarding changes to the banking rules. One such change affects people who depend on cheques, specifically their cheque books. With the new change, the central bank has put it forth that the National Automated Clearing House (NACH) will be operational 24 hours a day. This change will be implemented in all national and private banks. With that said, the new change will benefit the cheque user more as issued cheques can be cleared even on a holiday. For those in the habit of clearing their cheques on a working day, will need to adjust their operations because, with the new rule change, cheques can be cleared on a Sunday too.

This does have the added advantage of being a less time-consuming process. With that in mind, you will need to keep a minimum balance in your bank account at all times because with the faster clearance time comes a caveat. If you process the cheque faster there is also a chance that it may bounce and in such an event, you will have to pay a fine or penalty. Earlier customers did not have to worry about a cheque clearing on a weekend, but with the new changes, it’s a major shift in how we conduct our banking.

Along the same lines, keeping in mind that NACH will be operational all hours of the day, including holidays, it opens up a wider venue in terms of facilities. NACH is essentially a bulk payment system that is operated by the National Payments Corporation of India (NCPI). It, therefore, facilitates various types of transactions such as salaries, pensions, interest, dividends and so on. Additionally, it also acts as a facility through which the average citizen can pay their various bills such as those for water, electricity, gas, phone bills, loan EMI, mutual fund investments, insurance premiums and so on. The new rules mean that citizens no longer have to wait for the holiday to finish to pay these bills and can do so whenever they choose or at the earliest possible convenience.

NACH is a centralised system, that was put into play with the intent to consolidate several ECS systems running across the country under one banner while providing a framework for the standardization of practices. It was also intended to remove local barriers and inhibitors. The system under NACH was aimed at making a footprint or impact on a national scale that would cover the entire core banking system. This would enable bank branches that were spread across the nation, regardless of their geographical location.

The reason behind this significant rule change was attributed to the central bank wanting to make the customer’s life easier by leveraging the 24 by 7 availability of RTGS, NACH. Since its establishment, the entity has emerged as a popular mode of direct benefit transfer (DBT) to beneficiaries. This came in handy particularly during the Covid-19 pandemic when the government had to transfer subsidies. Bearing all in mind, plan out your next cheque transfer or issuing carefully and make sure that there is a minimum balance in your bank account in case it bounces.

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