Reserve Bank of India, Department of Banking Operations and Development (DBOD), today issued a Notification, indicating slight alterations to the Notification No.RBI/2009-10/130, DBOD.BP.BC No. 32 / 21.01.001/ 2009-10, dt.August 27, 2009 on Collection of account payee cheque – Prohibition on crediting proceeds to third party account
The Notification No is RBI/2010-11/ 222, DBOD.BP.BC.No.47/ 21.01.001/2010-11 dt.October 1, 2010.
The Circular can be accessed @
The highlights of today’s circular are : –
01) Slight modifications have been made to the Notification dt.27/08/2009
However the above freedom is subject to :
01) The banks should have a clear representation in writing given by the co-operative credit societies concerned that, upon realization, the proceeds of the cheques will be credited only to the account of the member of the co-operative credit society who is the payee named in the cheque.
02) This shall, however, be subject to the fulfillment of the requirements of the provisions of Negotiable Instruments Act, 1881, including Section 131 thereof.
03) The collecting bank shall also carry out proper due diligence with respect to such co-operative credit societies and ensure that KYC documents of the customers are preserved in the society’s records and are available to the bank for scrutiny.
The underlying caveat is: –
The collecting banks should, however, be aware that in the event of a claim by the true owner of the cheque, the rights of the true owner of the cheque are not in any manner affected by this circular and banks will have to establish that they acted in good faith and without negligence while collecting the cheque in question.
The above clarification will make life easier for Collecting Bankers, Co-operative credit societies and customers of Co-operative credit societies