Publications and Preprints

Cheques are one of the most accepted forms of payment for settling transactions. Money transactions through cheque collections are pertinent to banking and are an integral activity of any bank. It is not an optional service and hence such services by no means are a gratis. Moreover, the cost involved in collections of such cheques (local or outstation) is borne by the customers in some form or other. It was recognized as early as in the 1970s that cheque collection policy for the banks in India is a matter of concern. Though a micro issue with respect to the whole gamut of banking, this has its macro implications keeping in mind the mass of bank account holders in India. In this paper, we study the cheque collection policy of the country for both pre and post deregulation scenario. Also, based on a multidimensional scaling technique, categorisation of 31 banks with respect to various parameters of their present cheque collection policies has been made. Although not an exhaustive study, the minimal statistics gathered and analysed leads one to believe that the existing institutional mechanism for setting up cheque collection policies is not adequate. The spirit with which RBI deregulated the cheque collection process has not got translated into the policies made by banks. It is seen that forces of competition, as a deterrent, is inadequate to improve quality service in the field of cheque collections and that the banks and the regulator have a responsibility to act proactively in the interest of the depositors.