All Banks Must Pay Vendors Through Online

The Finance Ministry has directed all banks to make payments to vendors through online fund transfer. It said that they have been directed to make RTGS/NEFT payments to vendors. The Finance Ministry wants banks to take it up with their customers over time and vendors will shift payment to their suppliers to the online mode soon.

The officials also said that banks have also been asked to ensure that if the vendors’ transition to e-payment happens over a period of time banks can impose a penalty, if required. However, no time-frame has been mentioned.

Most officials of banks said that e-payments will reduce issuance of cheques and result in bringing down the cost of transactions. This will also help reduce frauds with payment through cheques. Now, banks are to move away from paper-based payments to electronic payments.

State Bank of Travancore (SBT) had started making e-payments even before the directive was issued. An official of SBT said that every vendor must have a bank account and should mandatorily mention the specific branch IFSC code and PAN number to SBT. Thus, all vendors also obliged to make e-payments, since it is a government order.

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