No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2006-2007/317 · issued 11 Apr 2007 · ~1 min read
Quick answerRBI mandates all Regional Rural Banks to accept cheques and drafts containing fractions of a rupee, following a Gujarat High Court directive. Refusal to honour such instruments will attract penalties under the Banking Regulation Act, 1949.
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.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
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.
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn05 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
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.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2475: RPCD.CO.No.RRB.BC.69/03.05.33/2006-07 — "Rounding off Amounts of Cheques to the Nearest Rupee" dated April 11, 2007”
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/317
RPCD.CO.No.RRB.BC.69/03.05.33/2006-07
April 11, 2007
All Regional Rural Banks
Dear Sir,
Rounding off amounts of cheques to the nearest rupee
We advise that recently a case involving refusal by a bank to accept a draft drawn in fraction of a rupee lodged for collection to the credit of Government account came up before the High Court of Gujarat, Ahmedabad. The High Court of Gujarat, taking a serious view in the matter, has directed Reserve Bank of India to take appropriate steps in the matter in accordance with law, in the light of the extant instructions and, if required, issue fresh notifications/ notices to all the banks who have issued internal circulars not to receive such cheques, etc., and see that stern action is taken against the persons who refuse to receive the cheques / drafts, which are drawn in fractions of a rupee. Regional Rural Banks (RRBs) are, therefore, advised to ensure that cheques / drafts issued by clients containing fractions of a rupee are not rejected or dishonoured by them. RRBs may also review the practice being followed by them in this regard and take necessary steps, including through issue of internal circulars, etc, to ensure that the concerned staff are well versed with these instructions so that the general public does not suffer. RRBs may also ensure that appropriate action is taken against members of their staff who are found to have refused to accept cheques / drafts containing fractions of a rupee.
2. Please note that any RRB violating the aforesaid instructions would be liable to be penalised under the provisions of the Banking Regulation Act, 1949.
3. Please acknowledge receipt to our Regional Office concerned.
Yours faithfully,
(C.S.Murthy)
Chief General Manager-in-charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/317 · issued 11 Apr 2007. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3409&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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