RBI asks NBFCs to adopt green practices, phase out cheques
Current · Source: Reserve Bank of India · RBI/2011-12/237 · issued FY 2011-12 · ~1 min read
Quick answerRBI directs NBFCs to support the Government's Green Initiative by increasing electronic payments, eliminating post-dated cheques, and phasing out cheques for cost-effective, faster settlements.
The rule, in the simplest words
Increase electronic payments like NEFT, RTGS, and UPI to help the government's green goals.
Stop using post-dated cheques for loan repayments and other deals.
Gradually stop using cheques in all business operations to meet green rules.
How it plays out — a real example
An NBFC compliance officer in Indore, Mr. Kumar, is excited to implement the RBI's green initiative in his daily work. He's training his staff to use digital payment systems like UPI, which will reduce paper usage and speed up settlements. Mr. Kumar is confident that this change will not only help the environment but also make his work more efficient and cost-effective.
What changed
RBI issued a circular on October 28, 2011, urging NBFCs to adopt the Government's Green Initiative. It specifically asks NBFCs to boost electronic payment usage, stop post-dated cheques, and gradually move away from cheques in daily transactions.
What it means for you
NBFCs must shift from paper-based to digital payment methods to align with government sustainability goals. This will reduce operational costs, speed up settlements, and improve accuracy. Lenders should prepare for a long-term move away from cheques.
What you must do
Increase adoption of electronic payment systems like NEFT, RTGS, and UPI in customer transactions.
Phase out acceptance and issuance of post-dated cheques in loan repayments and other dealings.
Gradually reduce cheque usage across all business operations to meet green compliance.
Train staff and update internal processes to support digital-first payment workflows.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs)
❓ Common questions
Why is RBI asking NBFCs to phase out cheques?
As part of the Government's Green Initiative, RBI wants NBFCs to reduce paper usage and adopt electronic payments for cost-effective, faster, and more accurate settlements.
Does this circular apply to banks as well?
No, this specific circular is addressed only to NBFCs and Residuary Non-Banking Companies, though similar green initiatives may apply to other financial entities.
What is the deadline for phasing out cheques?
The circular does not specify a deadline; it requests proactive steps and gradual phase-out, so NBFCs should start immediately but without a fixed end date.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/237
DNBS(PD).CC. No 248/03.10.01 /2011-12
October 28 , 2011
All Non Banking Financial Companies /
Residuary Non Banking Companies
Dear Sir,
Implementation of Green Initiative of the Government
As part of the ‘Green Initiative’ of the Government, the Government of India has suggested that steps be taken by entities in financial sector, including NBFCs to help better utilisation of their resources and also better delivery of services.
2. NBFCs are therefore, requested to take proactive steps in this regard by increasing the use of electronic payment systems, elimination of post-dated cheques and gradual phase-out of cheques in their day to day business transactions. These will result in more cost-effective transactions and faster and accurate settlements.
Yours faithfully,
(Uma Subramaniam)
Chief General Manager-in Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/237 · issued FY 2011-12. The plain-English explanation above is BankPulse’s own independent summary.
Gradually reduce cheque usage across all business operations to meet green compliance.
💻 IT / Systems
Increase adoption of electronic payment systems like NEFT, RTGS, and UPI in customer transactions.
📜 Compliance
Phase out acceptance and issuance of post-dated cheques in loan repayments and other dealings.
Train staff and update internal processes to support digital-first payment workflows.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs)), your first concrete step on “RBI asks NBFCs to adopt green practices, phase out cheques” is: “Increase adoption of electronic payment systems like NEFT, RTGS, and UPI in customer transactions.” (RBI issued this FY 2011-12).
Circular: RBI/2011-12/237 -- RBI asks NBFCs to adopt green practices, phase out cheques
Issued: FY 2011-12
Action required: Increase adoption of electronic payment systems like NEFT, RTGS, and UPI in customer transactions.
Action required: Phase out acceptance and issuance of post-dated cheques in loan repayments and other dealings.
Action required: Gradually reduce cheque usage across all business operations to meet green compliance.
Action required: Train staff and update internal processes to support digital-first payment workflows.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
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 03 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=6783&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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