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Monday, May 21, 2012

SBI's limited usage cheques upset account holders

The facility aimed at minimising frauds is causing problems to customers who use them for paying large sums for buying mutual funds & other financial products.

State Bank of India's new multi-city cheque books with a 'usage limit' have not gone down well with many well-heeled account holders.

While the new cheque books, issued a few months ago, are aimed at minimising frauds, customers investing large sums in mutual funds and other financial products are finding it inconvenient.

The bank initially introduced cheques with Rs 2 lakh usage limit for savings bank account holders but later increased the limit to Rs 5 lakh. The cheque books were issued to account holders having bulk deposits with the bank.

"These cheque books are causing a lot of problems. Most of the time, people do not see the 'usage limit' on the cheque. They just write a sum higher than the limit and send it for clearance. This has resulted in several cheques getting dishonoured," said a Mumbai-based independent financial advisor.

Multi-city cheques are payable at any branch, have no collection charges and have the same clearance time as local cheques.

According to a senior SBI official, the bank has decided to set usage limits to prevent fraudulent transactions and protect account holders. When a bank clerk handling cheque clearance, particularly in a remote branch, is given a multi-city cheque, he simply tallies the signature and pays off the bearer of the cheque. This has often resulted in fraudulent practices like presenting forged cheques.

"SBI, by putting a 'usage limit', is trying to reduce losses to genuine account holders who may be duped by unscrupulous elements," the senior official said. While the bank is trying to protect its customers, it is causing operational hurdles to account holders who draw high value cheques to invest in mutual funds and insurance products.

"HNIs invest anywhere between Rs 10 lakh and Rs 15 lakh in debt funds and insurance products. In such cases, the investor has to use three-to-four cheques to make one investment," said another distributor.

"The problem is SBI has not informed account holders how and whether cheque limits can be raised. Even bank employees are not sure if one could increase the usage limits," the distributor said.

While SBI account holders can demand plain cheques from branch counters, these will not be treated as multi-city cheques.

Source: EconomicTimes


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