Banks in states that have imposed limits on the "holds" that banks may put on checks before crediting them to a customer's account have not experienced a significant increase in fraud losses, a congressional subcommittee was told yesterday.

A half-dozen states -- Massachusetts, New York, Rhode Island, Connecticut, California and Oregon -- have thus far ordered banks to make funds available to customers soon after deposit. The periods range from one day for local checks to eight days for those drawn on out-of-state institutions. A dozen more states are discussing possibile limitations, according to Rhode Island state Sen. Leo Gannon.

Some financial institutions currently deny customers access to their money for up to three weeks after checks -- and in some cases, cashier's checks, money orders and even cash -- are deposited, observed Rep. Fernand St Germain (D-R.I.), who is chairman of both the subcommittee on financial institutions, which was holding the hearings, and the parent House Banking Committee. This practice, which he termed the "deposit shell game," has generated a heavy volume of consumer complaints.

Banks contend these longer check holds are necessary to prevent fraud since checks refused for insufficient funds are still returned manually to the originating bank, leading to delays in discovery of fraud. But since the holds affect all customers, they may greatly inconvenience those with no dishonest intent.