India's non banking financial firms asked to phase out use of cheques

As part of its green initiative, the Reserve Bank today asked all non-banking financial companies (NBFCs) to gradually phase out use ofcheques and shift to electronic payment system.

The government, in its green initiative efforts, has suggested several steps for entities in financial sector, including NBFCs, for better utilisation of resources and delivery of services.

“NBFCs are therefore, requested to take proactive steps in this regard by increasing the use of electronic payment systems, elimination of post-dated cheques and gradual phase-out of cheques in their day to day business transactions,” the RBI said.

These will result in more cost-effective transactions and faster and accurate settlements, it added.

The Finance Ministry has also developed a e-payment system for disbursal of subsidies to consumers of fertilisers, LPG and kerosene. This system is likely to do away with the use of cheques and bank demand drafts to make payments.