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Post dated cheques for clearing loans not mandatory

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MUMBAI: Auto and home loan borrowers need not pay post dated cheques towards EMIs as RBI has directed banks to collect monthly instalments through electronic mode wherever the facility for such fund transfer is available.

Banks are advised that no fresh or additional post dated cheques (PDC) or Equated Monthly Instalment (EMI) cheques shall be accepted at locations where Electronic Clearance Service (ECS) is available, RBI said in a notification.

"The existing cheques in such locations may be converted into ECS by obtaining fresh ECS (Debit) mandates," it said.

The move is aimed at cutting usage of cheques and promoting electronic transfer. It will also save borrowers the efforts of going to branch for collection of cheque books.

The notification also said that ECS also accords the same rights and remedies to the payee against dishonour of electronic funds transfer instructions under insufficiency of funds as are available under Section 138 of the Negotiable Instruments Act, 1881.

"Considering the protection available, there is no need for banks to take additional cheques, if any, from customers in addition to ECS (Debit) mandates," it said.

Cheques complying with CTS-2010 standard formats shall alone be obtained in locations, where the facility of ECS is not available, it added.

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