What changed
RBI observed banks misusing 'at par' cheque facilities from scheduled commercial banks for non-account holders. Now, RRBs and cooperative banks can only issue these cheques for their own use, KYC-compliant account holders (with transactions ≥₹50,000 debited from account), and walk-in customers for cash under ₹50,000 per individual. They must maintain records of issuance and ensure sufficient balances with the issuing bank.
What it means for you
This circular tightens KYC/AML controls by limiting 'at par' cheque usage to prevent potential misuse for money laundering. Banks must now track all such issuances and cannot use these cheques as a free pass for large cash transactions. It pushes banks toward digital remittance channels like NEFT/RTGS, reducing reliance on paper instruments.
What you must do
- Restrict 'at par' cheque issuance to own use, KYC-compliant account holders (with debit for ₹50,000+), and walk-in cash under ₹50,000.
- Maintain detailed records of each 'at par' cheque including applicant name, account number, beneficiary, and date.
- Ensure all 'at par' cheques are crossed 'account payee' and have sufficient balance/drawing arrangements with the commercial bank.
- Promote NEFT/RTGS or sub-membership for efficient remittances instead of 'at par' cheques.
Who it affects
Regional Rural Banks (RRBs), State and Central Cooperative Banks (StCBs/CCBs), Scheduled Commercial Banks extending 'at par' facilities
Can we still issue 'at par' cheques to walk-in customers for amounts over ₹50,000?
No, walk-in customers can only get 'at par' cheques against cash for less than ₹50,000 per individual. For higher amounts, they must be account holders and the transaction must be debited from their account.
What records do we need to maintain for 'at par' cheque issuance?
You must keep records of the applicant's name and account number, beneficiary details, and date of issuance. Also ensure sufficient balance or drawing arrangements with the commercial bank.
Are we required to use NEFT/RTGS instead of 'at par' cheques?
The circular advises using more efficient remittance methods like NEFT or RTGS, either directly or through sub-membership, but does not mandate it immediately. However, it strongly encourages moving away from 'at par' cheques.