India’s central bank moves to speed up cheque clearing
Major change in the cheque-clearing process have been announced by the Reserve Bank of India (RBI).
RBI Governor Shaktikanta Das unveiled the new initiative during the recent Monetary Policy Committee (MPC) meeting, saying the new system aims to cut the time needed for cheque clearing from the current two-day period to just a few hours.
In a statement the central bank said: “Cheque Truncation System (CTS) currently processes cheques with a clearing cycle of up to two working days. To improve the efficiency of cheque clearing and reduce settlement risk for participants, and to enhance customer experience, it is proposed to transition CTS from the current approach of batch processing to continuous clearing with ‘on-realisation settlement’. Cheques will be scanned, presented and passed in a few hours and on a continuous basis during business hours. The clearing cycle will reduce from the present T+1 days to a few hours.”
Governor Das explained that the updated system is designed to simplify and speed up the cheque-clearing process. This move addresses long-standing delays in fund transfers and aims to make transactions more efficient overall.
He said: “Cheques will be cleared within a few hours on the day of presentation. This will speed up cheque payments and benefit both the payer and the payee.”
At the meeting, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) opted to maintain the key repo rate at 6.5%, continuing its focus on the “withdrawal of accommodation”.
This marks the ninth consecutive meeting in which the central bank’s six-member MPC has decided to keep the key policy rates unchanged.
Das said four members of the six-member MPC voted in favour of keeping the policy repo rate unchanged at 6.5%.
Tax officials told to put ‘guidance over intimidation’
Income tax department officials should make renewed efforts to come across as responsible, responsive and transparent, and adopt a policy of ‘guidance over intimidation’ when dealing with taxpayers, a senior figure at the Central Board of Direct Taxes (CBDT) has said.
Ravi Agrawal, head of India’s direct taxes administration body, suggested they take a ‘PRUDENT’ approach, while speaking to his colleagues via an online video to mark the 165th Income Tax Day.
“I take this opportunity to present an approach to be adopted by each one of us irrespective of rank in the department,” he said. The approach, he said, has been encapsulated under the acronym PRUDENT and it will guide the officials as they continue to navigate the complexities of tax administration.
Explaining the acronym PRUDENT, Agrawal said P stands for professionalism, R for being responsible and responsive, U for understanding transactions and businesses, D for dedication and due diligence, E for effective enforcement, N for non-intrusive administration and T for technology-based tax administration.
He said the tax department had undergone ‘transformational’ change, adopted technology in its processes and increased the taxpayer base. He said the department’s orientation had changed from being largely an ‘enforcement and adversarial’ one to largely a service department facilitating taxpayer compliance through non-intrusive tax administration.
Agrawal said: “Our role as part of the tax administration is critical. It is incumbent on us to service the citizens as well as business with professionalism as we embark on our journey to fulfil ‘Viksit Bharat’ by 2047.
The term ‘Viksit Bharat’ means ‘Developed India’. It represents the government’s vision to transform the county into a developed entity by its 100th independence in 2047. The four pillars of Viksit Bharat are yuva (young people), Garib (the poorer sections of society), Mahilayen (women) and Annadata (farmers).
CBDT is a part of Department of Revenue in the Ministry of Finance. Its role is to provide essential inputs for policy and planning of direct taxes in India, while also being responsible for administration of direct tax laws through the Income Tax Department.
