Validity of cheques, drafts cut to 3 months
From April 1, 2012, the cheques and bank drafts will have a life of just three months instead of the earlier six months.
RBI has recently issues a notification that these instruments will have to be presented within three months from the date of issue as 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.
For customer awareness, banks have been asked to print the change on cheques and drafts that will be issued from April 1, 2012.
Why this change?
Over the last few years, a system had 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 misuse. RBI also asked banks to ensure that account payee cheques and drafts are only credited to accounts of the person named in the instrument.