The Reserve Bank of India (RBI) has decided to reduce the validity of cheques from the present six months to three months from April 1, 2012.
Through a circular (No. DBOD.AML BC No. 47/14.1.001/2011-12) issued on November 4, the RBI has asked chairmen and chief executive officers of all scheduled commercial banks (excluding regional rural banks) and local area banks not to make payments against cheques/drafts/pay orders/banker's cheques bearing dates beyond three months of the date of presentation of such instruments. The banks have also been asked to notify their customers about the change in the validity of these banking instruments by printing or stamping on cheque leaves, drafts, pay orders, and banker's cheques issued on or after April 1, 2012, suitable instructions ensuring compliance with the decision to reduce their validity.
At present, cheques and other instruments issued on a particular date can be held back for up to six months and need be presented only before expiry of the six-month period. However, the Government of India has notified the RBI that some sections of the bank customers were using the cheques and other instruments as equivalent to cash during this six-month period.
“The Reserve Bank of India is satisfied that in public interest and in the interest of banking policy, it is necessary to reduce the time 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. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, the 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,” the RBI circular said.
