RBI says new norms applicable to cheque truncation system only
The RBI has clarified that its directive on prohibiting alterations or corrections on cheques is applicable only to cheques cleared under the image-based cheque truncation system
The Reserve Bank of India (RBI) has clarified that its new norms related with alterations or corrections on cheques will be applicable only for cheques cleared under the image-based cheque truncation system (CTS). This will be applicable from 1 December 2010, the RBI said.
In a circular, the central bank said its prescription on prohibiting alterations or corrections on cheques is not applicable to cheques cleared under other clearing arrangements such as magnetic ink character recognition (MICR) clearing, non-MICR clearing, over-the-counter collection (for cash payment) or direct collection of cheques outside the clearing house arrangement.
According to a senior RBI official, it is true that 90% of cheque frauds involve beneficiary changes. A presenting bank has to be 100% sure that it is presenting a bonafide cheque and if it is not satisfied it may not present the same, he added.
The clarification from the central bank will give respite to a majority of bank customers who use the MICR clearing system and save them from the embarrassment of a cheque being returned.
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