Cheques, drafts to be valid for 3 months only
New Delhi: Banks from today will stop honouring cheques and drafts if they are not presented within three months of the date of issue as against six months earlier.
The decision to reduce the validity of cheques, bank drafts and other instruments to three months announced by the Reserve Bank of India (RBI) earlier will come into effect from today.
With a view to mitigating frauds related with such instruments, the RBI in a directive had said with effect from April 1, 2012, banks should not make payments against cheques, drafts, pay orders or banker`s cheques if they are presented after the period of three months from date of issue.
The directive followed complaints that some persons were taking undue advantage of the six-month validity period and circulating these instruments like cash.
Commenting on the decision to curtail the validity period of cheques and drafts, a senior banker said, the three-month validity period is a good enough time for conciliation of these instruments.
The RBI had said, "In public interest and in the interest of the banking policy, it is necessary to reduce the period within which cheques/drafts/pay orders/banker`s cheques are presented for payment from six months to three months from the date of such instrument."