What changed
Previously, RBI had advised specific steps for dealing with frequent dishonour of cheques of ₹1 crore and above. Now, RBI has extended the concern to cheques of value less than ₹1 crore, directing banks to formulate a Board-approved policy for such cases. The policy must also cover frequent dishonour of ECS mandates.
What it means for you
Banks must now formalize their approach to repeat cheque bounces for smaller amounts, which were previously left to individual discretion. This ensures consistent treatment of recalcitrant customers across the banking system. The policy requirement adds a compliance layer but allows banks to tailor actions based on their risk appetite.
What you must do
- Draft a Board-approved policy for handling frequent dishonour of cheques below ₹1 crore and ECS mandates.
- Ensure the policy includes clear escalation and action steps for repeat offenders.
- Review existing customer handling practices to align with the new policy requirements.
- Communicate the policy to all branches and relevant departments for implementation.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Bank branches handling cheque clearing and ECS mandates, Customers with history of frequent cheque bounces
Does this circular apply to Regional Rural Banks?
No, the circular explicitly excludes RRBs from its scope.
What should the Board-approved policy cover?
The policy must address frequent dishonour of cheques below ₹1 crore and also include provisions for frequent dishonour of ECS mandates.
Are the steps for large-value cheques mandatory for smaller cheques?
No, RBI states that it may not be necessary to extend all steps from the earlier circular to smaller cheques. Banks can design their own approach.