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!
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam
Fiercely independent and pro-consumer information on personal finance.
1-year online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
30-day online access to the magazine articles published during the subscription period.
Access is given for all articles published during the week (starting Monday) your subscription starts. For example, if you subscribe on Wednesday, you will have access to articles uploaded from Monday of that week.
This means access to other articles (outside the subscription period) are not included.
Articles outside the subscription period can be bought separately for a small price per article.
Fiercely independent and pro-consumer information on personal finance.
Complete access to Moneylife archives since inception ( till the date of your subscription )
