Misuse of Banking Channels – Issue and Payment of Demand Drafts for Rs. 50,000/- and above


Misuse of Banking Channels – Issue and Payment of Demand Drafts for Rs. 50,000/- and above

It is expected that all Bankers are aware of the rule that Demand Drafts, mail transfers, telegraphic transfers and travelers cheques above Rs50,000/- cannot be issued against a cash receipt. These should be issued by banks only by debit to the customer’s account or against cheques or other instruments tendered by the purchaser. This has been made clear by RBI Circular No. .BP.BC.No.114/C.469(81) – 91 dated April 19, 1991.

To avoid confusion, these instructions were extended to retail sale of gold/silver/platinum vide RBI  circular DBOD.No.IBS.1816/ 23.67.001/98-99 dated February 4, 1999.

However, it has been brought to the notice of RBI, that some banks have recently issued demand drafts of Rs. 50,000 and above on deposit of cash and not against debit to the customer’s account or against cheques or other instruments tendered by the customer.

RBI has taken a serious view of such breaches and has issued a strongly worded Notification NO. RBI/2011-12/135,DBOD.BP.BC. No. 26 / 21.01.001/2011-12, dt.August 1, 2011

The circular can be viewed @ http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6647&Mode=0

RBI is clear that any violation of the instructions will be viewed seriously. Hm, trust the Banks will tweak their systems to avoid breaches of the above notification.

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