Banking and monetary regulator, Reserve Bank of India has permitted banks to charge more from customers in terms of service charges for clearing activities mainly pertaining to high value and outstation cheques.

Following this permission, service charges on cheque clearance are expected to increase thereby making cheque payments costlier.

The circular is coming to effect from April 01, 2011 and thus banks would be fixing service charges for cheques valuing to above Rs 1 lakh.

Presently banks are not allowed to charge more than Rs 150 per cheque for speed clearing over Rs 1 lakh. Speed clearing means processing of outstation cheques in electronic format without physical transfer of the cheque from one place to another.

There are no clearing charges levied for speed clearing of cheques upto Rs 1 lakh and it continues to remain exempt till now.