Three-month validity of cheques, drafts from April 1
NEW DELHI: The life of your cheques and bank drafts has just been halved to three months.
In a notification issued on Friday evening the Reserve Bank of India said that from April 1, 2012, banks, drafts, pay orders and bankers' cheques will have to be presented within three months of the date of issue of these instruments. So, the next time you issue a cheque or get a draft prepared, make sure it is presented quickly.
The change has been prompted by instances of misuse of the payment instruments. "It has been brought to the notice of Reserve Bank by Government of India that some persons are taking undue advantage of the said practice of banks of making payment of cheques/drafts/pay orders/banker's cheques presented within a period of six months from the date of the instrument as these instruments are being circulated in the market like cash for six months," the notification said.
Banks have been instructed to print the change on the cheque leaves and drafts that will be issued from April 1, 2012, so that consumers are aware of the new guidelines.
Over the last few years, a system has evolved in which a cheque issued in favour of person A would be transferred to person B, on receipt of a commission as banks were willing to credit them into someone else's account. With the new norms, RBI hopes to reduce such instances of misuse.
Along with this change it has also asked banks to ensure that account payee cheques and drafts are only credit into accounts of the person who is the recipient.
Although the break up was unavailable, bankers said the move would affect individuals more as companies usually deposited cheques and drafts within hours of receiving it as they do not want to lose out on any interest income.