What changed
RBI has issued a circular to all RRBs instructing them to accept cheques and drafts drawn in fractions of a rupee, reversing any internal practices of rejecting such instruments. This follows a Gujarat High Court case where a bank refused a draft with fractional rupee amount for a government account.
What it means for you
RRBs must immediately stop rejecting or dishonouring cheques with paise amounts. Non-compliance will lead to penalties under the Banking Regulation Act, 1949. Banks need to review internal circulars and train staff to ensure seamless acceptance of such instruments, protecting customer convenience.
What you must do
- Issue internal circulars to all branches mandating acceptance of cheques/drafts with fractional rupee amounts.
- Train staff on these instructions and ensure no refusal of such instruments.
- Review existing practices and withdraw any internal circulars that prohibit acceptance of fractional rupee cheques.
- Take disciplinary action against staff found rejecting such cheques or drafts.
Who it affects
Regional Rural Banks (RRBs), RRB branch staff handling cheque collections, Customers issuing cheques/drafts with fractional rupee amounts
What triggered this RBI directive?
A Gujarat High Court case where a bank refused a draft with fractional rupee amount for a government account led the court to direct RBI to ensure banks accept such instruments.
What happens if an RRB violates this instruction?
The RRB will be liable to penal action under the provisions of the Banking Regulation Act, 1949.
Do these instructions apply only to government account cheques?
No, the circular applies to all cheques and drafts issued by clients containing fractions of a rupee, not just those for government accounts.