Cheque Mate

RBI gets tough about bounced cheques

To enforce financial discipline among bank customers, the Reserve Bank of India (RBI) has asked all commercial banks to introduce a tough new condition for operation of accounts with cheque facility: if cheques above Rs1 crore on a particular account of the drawer are dishonoured on four occasions during a financial year for want of sufficient funds in the account, no fresh cheque-book would be issued. Also, the bank may consider closing the account at its discretion.
The central bank has also proposed to amend the Negotiable Instruments (NI) Act 1881, Section 138, to allow banks to make part-payment of cheques in case of insufficient funds in that particular account. Banks are required to follow the  Goiporia Committee’s (1990) recommendation which says that dishonoured instruments (cheques) are to be returned to the customer within 24 hours. According to a circular issued by the RBI on 9th November, the paying bank should return the dishonoured cheques presented through clearing houses strictly as per the return discipline prescribed for the respective clearing house. The collecting bank, on receipt of such dishonoured cheques, should despatch it immediately to the payees/holders. According to a report of the Law Commission dated November 2008, there were over 38 lakh pending cases related to cheque-bouncing in various courts across the country. Delhi led with about 5.1 lakh cases of bounced cheques followed by Gujarat with 2 lakh cases!

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