Non-CTS-2010 complaint cheques valid up to Jul-2013-How does this impact you?
For the past 6 months, RBI has been announcing several times saying Non-CTS-2010 compliant cheques would be valid up to specific period. Currently the deadline is up to 31-Jul-13. If you have taken home loan, personal loan or consumer loan for any electronics purchased, this deadline would have an impact on your credit score unless you have already taken necessary steps for this.
What are CTS-2010 compliant cheques?
CTS refer to Cheque Truncation System. These cheques would eliminate the current practice of physical presentation of cheques to the payee bank which reduces the time taken for cheque clearance.
RBI also said that, where banks have a facility to do ECS / Direct debit mandate, they should accept only such facility instead of accepting post dated cheques (PDC’s) (not even CTS-2010 compliant cheques). All cheques issued by banks, from now would be CTS-2010 compliant.
How this RBI move would impact you as an individual?
If you have taken home loan, personal loan or any other consumer loan for purchasing of electronic goods and issued Non-CTS-2010 cheques earlier, you need to act on this, else it would impact you in several ways.
a) Cheques would not be honored: Non CTS-Cheques issued by you would not be honored from 1-Aug-2013. Means you would be defaulted on loan and need to pay penalty for such default along with cheque bounce charges.
b) Impact on your credit score: Since your cheque has not passed and defaulted your loan EMI, your credit score would effect and it would be little difficult to get loan in future. Even if you are getting loan, you may be charged with higher interest rates as your credit score would be low.
Can I check on my own, whether cheques issued to banks or financial institutions are CTS-2010 compliant?
It may be not always possible to cheque whether cheques issued by you are CTS-2010 compliant or not. Since you would have taken loan some years back, the cheques are not with you, but with banks or financial institutions from whom you have taken loan. If you are planning to issue the cheques now for any homeloan or any other loan, please see this picture of Axis Bank cheque which shows whether it is CTS-2010 compliant or not.
Source: Axisbank website
Well, then what should you do now?
- Request your bank to provide CTS-2010 compliant cheques. This would be useful to give ECS mandate + cancelled cheque for existing loans. It woule be also useful, in case you have any plan to take home loan or any other loan in near future to avoid last minute rush of not having ready cheque book.
- Approach your branch or financial institution wherever you have taken the loans. Fill up the ECS mandate for all such loans. Sign the ECS mandate and give it to them along with CTS-2010 compliant cancelled cheque.
Conclusion remarks: Even I have not paid much attention to such important activity. I am taking some steps now to update them immediately so that my credit score would not affect.
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Non-CTS-2010 complaint cheques valid up to Jul-2013-How does this impact you