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Shree. ( Advocate.)     01 December 2009

British Banks are drawing up plans to stop accepting cheques

British Banks are drawing up plans to stop accepting cheques and instead demand payment by plastic or electronic transfer.

 

Consumer groups and businesses have attacked the proposals, raising the prospect of a “Save the cheque” campaign to protect a 300 year old method of payment.


Although the number of cheques written each day has fallen by nearly two-thirds in the past 20 years, to 3.8m a day, many small traders and older people still rely on cheque books to pay bills. The Payments Council, a panel drawn from the big banks, will vote on December 16 on whether to abolish the cheque. It has prepared for this for two years, already announcing that cheque guarantee cards will be axed in June 2011.

A source close to the panel said “A lot of work has gone into getting ready to do this for 2018 and its pretty certain to go through. The only thing that might delay this is politics. After all, you may have noticed bankers are not exactly popular at the moment.”

 

An announcement confirming the move is expected in January. It would save the banks hundreds of millions of pounds. Cheques cost up to $1 to process-four times as much as electronic payments. Paul Smee, chief executive of the Payments Council, said it had already talked with interested parties about the plan.”We will have to show that no one will lose out,”. “So far no group consulted has said 2018 is not feasible”. Mapping out how UK might move from a society where cheques are employed for almost 1 in 25 payments to one where there is no need to use a cheque is no small task. One plan is for a town to be picked as UK’s first “cheque-free zone”, to test the impact. Chip and Pin card-security systems were piloted in Northampton before becoming mandatory in February 2006[Sunday times London]

What is your take on the above subject especially if it is applied to India and other countries globally?Comments are welcome.



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 5 Replies

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     01 December 2009

It is very unfortunate that banks are trying to go against the interest of common man whereas latest facilities are not available in the most parts of the country. The policy should be framed keeping in view the entire country and not mahanagars.


(Guest)

According to time and technology banking system to be changed. What ever system banks adopt but customer's bank security code should kept confidential.

 

Shree ji, How can we expect that system in India? Shall we belive our political jokers and advicers to the Government? How is today's administration in our country? There is no head and tail. It is possiable when a good administrator rule our country ruthlessly to bring all system properly.

 

Hemant Agarwal (ha21@rediffmail.com Mumbai : 9820174108)     02 December 2009

"Shree" :

 

I am worried about my Legal Consultancy business.  

 

IF cheque payment mandatorily goes 100% electronic, OBVIOUSLY the computer won't affect transfer payment if there is no balance in the account of the transferor AND there won't be any scope of  "cheque bouncing" or "N.I.Act" cases and then no clients for cheque bouncing cases and no filing of such cases in the MM Court.

 

At present, in India, most banks have Money transfer facility thru their Internet Banking facility.  In such facilities, if the transferor does not have sufficient balance in his account,  the transfer of money does not place and the receiver party does  "never"  know that the electronic money transfer has bounced due to "insufficient balance".

 

In fact some business houses in India are coerching their clients to pay only by electronic fund transfers thru Internet banking facility.  Even several utility companies are giving ECS facility (like Electric companies, Telephone companies, Gas companies etc...)  In a way, I think payment by electronic transfers OTHER THAN PHYSICAL CHEQUES is a better no-head-ache option.

 

By any chance,  Do you think that this is a "CONSIPIRACY" against lawyers by such banking policies, so that lawyers do not get cheque bouncing cases at all, in the light of above.

 

Keep Smiling .... Hemant Agarwal
 

1 Like

Hardik Mehta (Family Counsellor)     02 December 2009

This is true and is really helpful in the developed countries. There is the protection also against the account transfer (also know as direct debit) where if any fraud is compensated immediately within 28 days of the complain. From Nov 1, 2009 the bank has put the new code of regulation in Europe where in the transfers which generally takes 3 days, has to be completed in next working day. This way the funds transfer will happen quickly. This will be helpful for the consumers paying the bills as they do not have to wait for 3 days to get credited on the others account and hence no delay charges.

The banking system of UK is really good as compared to India. Here the process is in place and everything is documented, even the charges. Also, if there is any change in the charges, then you are having minimum 30 days notice to the customer and then only the charges are levied. If the notice is not given, then the Banking Watchdog (FSA) will intervene in the matter and compensate the customer.

Regarding the cheques, this will eventually be phased out since this requires human intevention and is likely to be having high error rate. The stores have also stopped taking he cheques. Chip and Pin cards (credit / debit) have proven to have very less fraud compared to the conventional cards in India. Cheque bouncing is also common in UK, and the charges have to be bourne by the person who has issued the cheque. This is not the criminal case, but the issuer is given another chance to pay the amount owed with penalty. If still the issuer does not pay the amount, then legal proceeding starts and the issuer then have to pay the legal fees. If still he fails to pay, then the warrants are issued and he will be arrested. If he is having the property, then that will be put for auction and the charges will be recovered. If not, then the charges will be taken from his salary. The consumer will not have to pay any charges including the legal charges as these charges are taken from the issuer.

1 Like

Hardik Mehta (Family Counsellor)     02 December 2009

Hemant,

Relate the cheque to the Direct Debit where in the opposite party takes out the money from your bank account on the predefined date with the amount converyed to you. If this does not happen then the opposite party can issue the legal services, if the amount is not paid as discussed above. This gives the party the chance to pay the amount. This is not the conspiricy agains the lawyers, but this is the fact that the services are faster.

 


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