Page 95 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes In the case of outstation cheques, the time taken would vary from three to ten days. RBI has
advised all the banks to publicize their cheque collection policy so that customers have an idea
as to when the proceeds would be available for utilization by the customer. For delay beyond
the normal period, banks are required to compensate the customer (even without customer
asking for the same).

Clearing Charges

The person receiving payment by means of cheques would incur some charges to realise the
funds through this bank. In case of local cheques, no charges are levied. In case of outstation
cheques, the bank would take some processing/collection charges depending upon the amount
of the cheque and the place from where it has to be realised. The charges levied by the banks are
generally decided by the Indian Banks’ Association or the banks themselves. Banks are also
required to publicize the schedule of service charges.

Payments without use of Cheque and Cash

Payments can be made between two or more parties by means of electronic instructions without
the use of cheques. Retail payment mechanisms available to facilitate such payments are the
Electronic Funds Transfer, Electronic Clearing Service, credit/debit cards etc.

Role of ATMs in Payment and Service Process

In addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer
between accounts, deposit of cheques and cash into accounts, balance enquiry and several other
banking transactions which the bank/s owning the ATMs might want to offer.
ATMs of other banks can also be used by the customer if the customer’s bank has an arrangement
with the bank owning him ATM. In case of such use, normally a service charge called “interchange
fee” is levied on the customer.

5.2 Role of Credit/Debit Cards in Payment Systems

Credit/Debit cards are being widely used in the country as they provide a convenient form of
making payments for goods and services without the use of cheques and cash. Banks issue credit
cards to their customers. The merchant establishment who accepts credit/debit card payments
will claim the amount from the customer’s bank through his own bank.

Did u know? In addition to cash withdrawal, ATMs can be used for payment of utility bills,
funds transfer between accounts, deposit of cheques and cash into accounts, balance enquiry
and several other banking transactions which the bank/s owning the ATMs might want to
offer.

Debit Card vs. Credit Card

Debit Card is a direct account access card (amount transacted gets debited immediately). The
amount permitted to be transacted in debit card will be to the extent of the amount standing to
the credit of the card user’s account. On the other hand, a credit card involves provision of credit
to the card user which is paid by the card user on receipt of the bill either in full or partially in
installments.

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