RBI issues circular on Payments of Cheques / Drafts / Pay Orders / Banker's Cheques

[praveen]

Share:

Facebook X (Twitter) LinkedIn WhatsApp Email Share Link

RBI has recently released circular on Payments of Cheques / Drafts / Pay Orders / Banker's Cheques . The same has been summarized as below. Detailed communication can be referred to in the attached RBI circular

Circular No. DBOD.AML BC. No. 47/14.01.001/2011-12 dated November 04, 2011 titled Payments of Cheques / Drafts / Pay Orders / Banker's Cheques

Section 35A of the Banking Regulation Act, 1949, Reserve Bank hereby directs that with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument.

Reserve Bank is satisfied that in public interest and in the interest of banking policy it is necessary to reduce the period within which cheques/drafts/pay orders/banker’s cheques are presented for payment from six months to three months from the date of such instrument.

 

[B Suresh Kumar]

The reason cited by RBI for reducing the validity period of the cheque/ DD/po is to prevent its misuse by black money traders who rotate the cheques instead of depositing it in the bank.

 

[sangom]

The wording looks unclear to me. "banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument."

So it means if someone presents an instrument bearing today's date or any subsequent (i.e., future dates), is it ok to make payment today? May be I am dull and don't understand!

 

[zebra16]

The wording looks unclear to me. "banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument."

So it means if someone presents an instrument bearing today's date or any subsequent (i.e., future dates), is it ok to make payment today? May be I am dull and don't understand!

QUOTE:
Section 35A of the Banking Regulation Act, 1949, Reserve Bank hereby directs that with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument
UNQUOTE

I suppose you have had only a quick look at the Directive. The Directive is clear enough. With effect from 1st April 2012, cheques etc bearing the date 1st April 2012 or any date thereafter should not be paid if they are presented beyond three months from the date of issue. If the cheques etc. are in circulation bearing any date prior to 1st April 2012, they shall be continue to be cleared within the present time span of six months. There is of course no provision to make payment of post dated cheques etc.

 

[sangom]

QUOTE:
Section 35A of the Banking Regulation Act, 1949, Reserve Bank hereby directs that with effect from April 1, 2012, banks should not make payment of cheques/drafts/pay orders/banker’s cheques bearing that date or any subsequent date, if they are presented beyond the period of three months from the date of such instrument
UNQUOTE

I suppose you have had only a quick look at the Directive. The Directive is clear enough. With effect from 1st April 2012, cheques etc bearing the date 1st April 2012 or any date thereafter should not be paid if they are presented beyond three months from the date of issue. If the cheques etc. are in circulation bearing any date prior to 1st April 2012, they shall be continue to be cleared within the present time span of six months. There is of course no provision to make payment of post dated cheques etc.

Thank you. As I said, I could not make out this meaning.

 

[Nara]

... If the cheques etc. are in circulation bearing any date prior to 1st April 2012, they shall be continue to be cleared within the present time span of six months. There is of course no provision to make payment of post dated cheques etc.

Narayan, is this a loop hole? Could people be able to continue to write checks with dates prior to April 1, 2012 and circumvent this rule?

Cheers!

 

[zebra16]

Narayan, is this a loop hole? Could people be able to continue to write checks with dates prior to April 1, 2012 and circumvent this rule?

Cheers!

One may view it as a loop-hole.... people get time till 30th September 2012 to write back-dated cheques (to the full tenor of 6 months - as prevailing now) and encash it. With effect from 1.10.2012, the effect of the change will be full

Regards