UCO Bank, a leading public sector banking service provider launched a new scheme called the "Pre-Funded Cheque" on Tuesday.

R K Mittal, Zonal Manager of the bank, while launching the product said, "The Pre Funded Cheques are protected against dishonor of cheque on account of insufficiency of funds as back up funds are arranged at the time of issuance itself."

The new product would earn interest on funds kept in the savings bank account and at the same time would save on commission normally incurred on issuance of Demand Drafts, Traveler Cheques or Gift cheques, he added.

The Pre Funded Cheques would be issued in three pre-determined denominations of Rs 1000,Rs 5000 and Rs 10000 in cheque books containing multicolored cheque leaves on payment of very nominal charges for the facility.

However this facility will only be available to the existing customers of the bank.

The product is expected to increase saving bank deposits and current deposits through its aggressive marketing of pre funded cheques.

Pre-funded cheque facility could also be discontinued whenever the customer wishes to close his account.

Initially, the facility has been initiated in 261 select Core Banking Solution (CBS) branches of the bank.

V P Singh, general manager, Kolkata-1, UCO Bank said, "The bank has decided to extend the CBS facility to other branches as well based on the response to the existing ones. Setting up CBS in all branches would be over by 2009. Currently out of our total 1,980 branches in India, 975 branches would provide CBS."

The bank also announced that it would set up 60 new branches across the country with 13 units coming up in rural areas by March 2009.