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Saturday, March 24, 2012

Business News: Cheques, drafts to be valid for 3 months from April 1st

Come April 1 and cheques and bank drafts will be valid only for 3
months, a development that RBI thinks will help mitigate frauds
related to such instruments.

The Reserve Bank of India (RBI) has directed that with effect from
April 1, 2012, banks should not make payments against cheques, drafts,
pay orders or banker's cheques if they are presented after the period
of three months from date of issue.


It has been brought to its notice by the government that some persons
were taking undue advantage of the six month validity of cheques,
drafts, pay orders, banker's cheques by circulating them like cash for
this period, RBI had said in a notification earlier.

According to a senior banker, the three-month validity period is a
good enough time period for instrument conciliation.

It was reported to Central Economic Intelligence Bureau that some
persons are taking undue advantage of the practice of banks of making
payment of cheques or draft 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.

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