Terminologies Simplified

SB account with chequebook facility: At the time of opening the savings bank/home savings bank account, you are required to indicate whether you need chequebook facility. This is to be indicated because there are other SB accounts such as SB without chequebook facility and SB no-frills account/SB under Jan Dhan Yojna (or SB account with zero balance). An SB account with chequebook facility will also require the customer to always keep a minimum credit balance (of money) in their account so to keep the account in ‘active’ status, and this balance differs from bank to bank. Stop-payment instruction: If the customer has lost a cheque leaf or if the entire chequebook gets misplaced by them, or if they want a particular cheque to not be honoured (returned without charging to his account when the issued cheque is presented for payment to their bank), they need to issue a written/ email instruction to the bank to that effect. This instruction will be accepted by the bank only before the cheque is presented to them for payment. The bank levies a charge for this service. Cheque outward return: If the customer deposits a cheque given to them (in lieu of services rendered by them) for collection and credit to their account, and if the cheque is subsequently returned unpaid due to financial inadequacies such as ‘funds insufficient’ or ‘exceeds arrangement’, they are charged for the service of collection/return at the branch where the cheque was deposited. As far as this type of service goes, the charges are to be minimal, as the cheque depositor has no prior clue about the availability/non-availability of funds in the account of the cheque drawer. Banks’ charging huge amounts under this heading becomes more a breach of ethics, going against all norms of reasonableness. Cheque inward return: If the customer issues a cheque to third parties and this cheque gets returned to the presenting bank owing to lack of adequate balance kept in the drawee’s SB account, signifying a total lack of financial discipline on their part or probably a mismatch between their receipts and payments position, a charge is levied for the service of returning the instrument. Service charges under this segment are huge and banks invariably earn huge revenues on this account. Now, though, due to the incorporation of Section 138 under Indian Negotiable Instruments Act, 1881 (as amended up to date), where dishonouring a cheque for lack of funds is a cognizable offence inviting fines and jail term, instances of huge cheque returns have been kept under check. Electronic clearing service (ECS): ECS is an electronic mode of funds transfer from one bank account to another. It can be used by institutions for making payments such as distribution of dividend interest, salary and pension, among others. It can also be used to pay bills and other charges such as for telephone, electricity and water, or for making equated monthly installments (EMI) payments on loans as well as periodic investments in mutual funds. These are carried out by means of a mandate that authorizes the institution to avail the ECS credit facility; the institution can then debit or credit the payments through the bank. ECS can be used for both credit (funds to your account) and debit (funds from your account) purposes. The RBI has deregulated the charges by directing banks to afford ECS credit/debit free of charge to the beneficiary accountholders. So this service is free of any charge. ECS returns outward: Though ECS is a free facility as far as affording credit/debit to/from the SB account is concerned, the same is not available when ECS instruments are returned by the paying bank without debit to account due to lack of funds in the account. There are charges to be paid for effecting returns to the presenting bank. Addition/Deletion of accountholder: This is a specialized service wherein the bank permits your account to be converted into a joint account or expanding of the existing joint account by inclusion of a third member as joint accountholder or deletion of an existing joint accountholder. This shall entail submission of a form devised for this purpose which shall also include fresh operational instructions and repayment instructions in the unfortunate event of death of any of the accountholder(s). This service entails one to pay service charge to the bank.