RBI limits tenure of cheques, drafts and pay orders to three months from 1 April 2012
04 Nov 2011
The Reserve Bank of India (RBI) has announced a reduction in the tenure of cheques, drafts, pay orders and banker's cheques from six months to three months because of what it said circulation of these instruments as currency.
RBI has warned the general public against misuse of these instruments, taking advantage of their six months' validity.
In India, it has been the usual practice among bankers to honour such cheques and drafts presented for payment within a period of six months from the date of issue of the instruments, RBI noted.
RBI said the changes have been necessitated after the government brought to its notice that it had become commonplace to find people taking undue advantage of the six-month validity of these instruments by circulating them in the market like cash for six months.
Accordingly, RBI has directed banks not to honour cheques/drafts/pay orders/banker's cheques presented beyond the period of three months from the date of issue of such instruments, with effect from 1 April 2012.
RBI has asked banks to ensure strict compliance of these directions and notify the holders of such instruments of the change in practice by printing or stamping on the cheque leaves, drafts, pay orders and banker's cheques issued on or after 1 April 2012, by issuing suitable instruction for presentment within the period of three months from the date of the instrument.