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Echeque for Retail and Corporate Customers

Cheque is the vital instrument of Finance. Every individual or organization uses cheque for the Payment.Even though we see a rise in online transaction and online transfer Cheque is still required in many cases let's say in case of Rent agreements  and Post Dated Payments in many organization.

Most Important thing is Cheque serve as the Contract that payment will be done on that date and it assures the party of the payment. It even as legal binding if the cheque is dishonoured.

BlockChain Technology with its core feature like Security, Security Shared Shared Records , Trust , Encryption  can be used to eliminate or minimize the usage of printed cheques

Cases where physical CHEQUE Books are must.

There are many other cases in real life where cheque is required , like private loans , part payments etc.

  1. Exchange of Goods and part payment is done , IN such cases post dated cheque is give as a part of surety. Here cheque act as a contract which will be executed once the time is reached.
  2. Rent Agreement - In rent agreement 12 or more cheques are give to owner by rentee. This ensure that payment will be done if cheque is dishonoured required action can be taken against rentee.

Problem With Current Cheque Book (Approx 550 million account are in India)

  1. Cost of Printing
    1. Cheque Book Requires unique printing with all security features. With printing done for even 10% for account holder cost is very very high.
  2. Cost of Storage
    1. Once the cheque comes for clearing it has to be stored for specific duration. This adds to pile up and increase cost of storage
  3. Have to go to Bank to Deposit Cheque
    1. In the age of digital world, why do we need to go to bank account to deposit cheque. Waiting time and fuel.
  4. Delay in Clearance
    1. Though the communication is so advance , though the movement of cheque has been stopped it takes around 2 days to clear the cheque and that’s minimum.
  5. Too much paper and other resources is wasted
    1. Total Number of Bank account in India is approx 550 million and only 30% of them uses checkbook we can almost 27,000 trees are being cut down per year to create the cheque book.
    2. Million ton liters of water is being to prepare the cheque book

WHAT IS ECHEQUE ?

Echeque  solve all the problems with the current chequebook system and provides all the features of current cheque book

How it’s work

  1. It’s work like the current chequebook system but only difference is it’s not printed
  2. User login into system and he will see his available banks
  3. He will create cheque to  customer with his account name
  4. Cheque  will be given  via register mobile number in the system
  5. Receiver will get the cheques in his online accounts
  1. Receiver will see all the banks account he has
  2. The receiver will deposit the cheque online to any of his accounts, after validation cheque will go the respective banks for Clearance.
  3. Bank will send the cheque to User’s Bank for Clearance if everything is fine funds will be credited immediately

Exceptional Cases

  1. In case User has paid to Receiver by some other means, Receiver can return the cheque to the user.
  2. If cheque is bounced due to insufficient funds, fine can be implemented as per current rule
  3. Funds are insufficient, User request Receiver to wait for few days, in such case Receiver may not deposit the cheque.

Use Cases of ECHEQUE

  • User Case 1 - Rent Agreement
  1. Suppose Mr. X has taken a flat form Mr. Y for 11 months, as a standard duration.
  2. Now During Rent Agreement Mr. X login into the his echeque system or him bank account from let's Say ICICI Bank.
  3. Mr. X will click on create cheques and will create 11 number of cheques online.
  4. Mr X will enter mobile number of Mr. Y and cheque will be sent to echeque account of Mr. Y
  5. On the first of next month let's say 1st November , Mr. Y will login to the echeque account or his online bank account.
    1. If he login to online bank account he can deposit the echeque only to his account
    2. If he login to echeque account he can deposit the echeque to any of his linked bank account.
  6. He will see all his bank accounts and all the available cheques.
  7. Only validated echeque which can be deposited will be selectable.
  8. Mr. Y will select echeque of November and will deposit the cheque into Axis Bank
  9. Funds will be available to his account after clearance process.
  • Use Case 2 - Post Dated Payment of Second Hand Car
  1. Mr. X buys a car from Mr. Y. on 1st November.
  2. The amount of the second hand car is Rs. 2,00,00/-.
  3. Mr. X pays Mr. Y Rs. 50,000 in cash and ask him to accept remaining Rs. 1,50,000 after 15 days.
  4. In Order to ensure payments Mr. X pays a echeque of Rs. 1,50,000  date 15th November.
  5. Mr. X login to his bank account and issues a cheque to Mr. Y
  6. On 15th November Mr. Y login to his echeque account and deposit the cheque to his HDFC Account.
  7. Funds are available to Mr. Y account after clearance process.

Technical Details of how System will work in BackEnd via BlockChain

  1. Every user of Banking System will be given an address with username and password , which will be be mapped to Mobile Number.
  2. User will have to register the respective bank to enable echeque with that Bank.
  3. When User issue the check to Payee :
    1. A Permanent record in the blockchain will be created with information of User and Payee
    2. Smart contract will be created of specific amount which can be executed after date condition is satisfied
    3. Once payee deposit the check , smart contract will start execution
    4. Smart contract here has to be manually approved by the Bank to complete..
    5. Once the smart contract is approved funds will be transferred from User to Payee Account.

How BlockChain will help in Echeque

  1. BlockChain will ensure the once a cheque is create it cannot be modified under any condition
  2. BlockChain data of Echeque will be distributed across server with Bank with Roles and Rights
  3. All the data can be access by Bank any time with the help of API
  4. All data will be distributed and on one can modify it, a secure public ledger , key characteristic of BlockChain.
  5. Trust on BlockChain will ensure that people will start using it

Advantages

  1. Echeque will minimize clearance time.
  2. No Fraud like possible in Cheque Book.
  3. Cost Reduction since the movement of Cheque will be reduced to almost 0.
  4. No printing will help further to reduce the cost.
  5. User can deposit the cheque from his laptop , no need to visit Bank.
  6. Staff Require to Handle the cheque will be reduce , which can be utilized for other productive work.
  7. Benefit to Environment because of digital echeque.

Want to implement Echeque for you Banking System please contact techaroha here.