What changed
RBI reiterated that Cheque Return Memos must be signed or initialled, as per Rule 6 of URRBCH. Some banks had stopped signing computer-generated memos, which RBI now clarifies is a violation. The circular reinforces existing instructions from September 2010.
What it means for you
Banks must ensure every Cheque Return Memo carries a manual signature or initial, regardless of being computer-generated. Non-compliance could weaken legal cases involving dishonoured cheques and attract regulatory action. This affects all scheduled commercial banks, RRBs, and cooperative banks.
What you must do
- Update internal processes to ensure all Cheque Return Memos are signed or initialled by an authorised officer.
- Train branch staff and clearing departments on the mandatory signing requirement under URRBCH Rule 6.
- Audit current practices to identify and correct any instances of unsigned return memos.
- Communicate this directive to all branches and clearing houses immediately.
Who it affects
All Scheduled Commercial Banks including RRBs, Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks
Why is signing the Cheque Return Memo important?
The signed memo serves as a critical document for legal action in case of cheque dishonour. Without a signature, the validity of the return reason may be challenged in court.
Does this apply to computer-generated memos?
Yes. RBI explicitly states that computer-generated memos must also be signed or initialled. The absence of a signature is a violation of URRBCH rules.
What are the consequences of non-compliance?
Non-compliance is a violation of instructions under the Payment and Settlement Systems Act, 2007, and could lead to regulatory action against the bank.