Account Payee Cheques: No Third-Party Credit for StCBs/DCCBs

What changed

RBI has issued a fresh reminder that the existing ban on crediting account payee cheques to anyone other than the named payee remains in force. The circular also confirms that the earlier relaxation for co-operative credit societies—allowing collection of cheques up to ₹50,000 from their members—continues unchanged. No new rules have been introduced; the focus is on enforcement of existing instructions.

What it means for you

Banks must tighten their internal controls to ensure account payee cheques are never deposited into third-party accounts, as non-compliance risks regulatory action. For co-operative banks handling credit society accounts, the ₹50,000 threshold relaxation is still available but must be applied strictly per the conditions laid out in the October 2010 circular. This reinforces the need for robust cheque processing systems and staff training to avoid inadvertent violations.

What banks were required to do at the time

• Reinforce staff training on the absolute prohibition of crediting account payee cheques to third-party accounts.
• Update internal audit checklists to specifically verify compliance with this circular and the earlier April 2006 instructions.
• For co-operative credit society accounts, ensure the ₹50,000 limit and all conditions from the October 2010 circular are strictly followed.
• Extend the same prohibition and relaxation to drafts, pay orders, and bankers' cheques as clarified in the circular.
• Review and strengthen system-level controls to prevent any automated or manual override of the third-party credit ban.

Who it affects

All State and Central Co-operative Banks (StCBs/DCCBs), Co-operative credit societies and their member customers, Bank operations and compliance teams handling cheque clearing