What changed
RBI has directed all scheduled commercial banks (excluding RRBs) to ensure that demand drafts of Rs 20,000 and above are issued invariably with account payee crossing. Previously, banks could issue such drafts without crossing, which allowed unscrupulous elements to use them as a substitute for cash settlements.
What it means for you
Banks must update their DD issuance systems and procedures to enforce account payee crossing for all drafts of Rs 20,000 and above. This move tightens the payment trail, reduces money laundering risks, and aligns with the existing rule that account payee instruments must be credited to the payee's account. Lenders should expect increased operational compliance but lower fraud exposure.
What you must do
- Update your demand draft issuance software to automatically apply account payee crossing for all drafts of Rs 20,000 and above.
- Train branch staff and treasury teams on the new mandatory crossing requirement and the rationale behind it.
- Review and amend internal circulars and customer-facing documents to reflect this regulatory change.
- Ensure that any exceptions or manual overrides are strictly controlled and audited.
Who it affects
All scheduled commercial banks (excluding RRBs), Bank treasury and operations departments, Branch managers and cash handling staff, Customers issuing demand drafts of Rs 20,000 or more
Does this apply to demand drafts below Rs 20,000?
No, the RBI directive specifically covers demand drafts of Rs 20,000 and above. Lower-value drafts are not affected by this circular.
What happens if a bank issues a DD without crossing for Rs 20,000 or more?
That would be a violation of RBI instructions. Banks must ensure compliance to avoid regulatory action. The circular does not specify penalties, but non-compliance could invite supervisory scrutiny.
Are regional rural banks (RRBs) covered by this circular?
No, the circular explicitly excludes RRBs. It is addressed to all scheduled commercial banks other than RRBs.