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RBI tightens 'at par' cheque usage for RRBs and cooperative banks

Current · Source: Reserve Bank of India · RBI/2013-14/344 · issued 29 Oct 2013 · ~2 min read
Quick answerRBI restricts RRBs and cooperative banks from using 'at par' cheques for walk-in customers over ₹50,000 and mandates KYC compliance, record-keeping, and 'account payee' crossing to curb money laundering risks.
The rule, in the simplest words
How it plays out — a real example

When a customer comes to the bank to withdraw ₹40,000 in cash, the KYC & compliance officer checks if the customer has a KYC-compliant account and if the transaction amount is below ₹50,000. If yes, the officer issues an 'at par' cheque for the customer, ensuring it is crossed 'account payee' and has sufficient balance with the commercial bank. The officer also maintains a record of the cheque issuance, including the customer's name, account number, and date.

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

Who it affects

Regional Rural Banks (RRBs), State and Central Cooperative Banks (StCBs/CCBs), Scheduled Commercial Banks extending 'at par' facilities

❓ Common questions

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.

📜 Read the original circular — full text as issued by RBI
RBI/2013-14/344 RPCD.CO.RRB.RCB.BC.No. Cir.No. 48/07.51.010//2013-14 October 29, 2013 The Chairman All Regional Rural Banks (RRBs) All State and Central Co-operative Banks (StCBs and CCBs) Dear Sir, Know Your Customer (KYC)/Anti Money Laundering (AML) Standards/Combating Financing of Terrorism (CFT)/ Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 ‘At par’ cheque facility extended to Cooperative Banks / Regional Rural Banks by Scheduled Commercial Banks It has been observed that some banks are utilizing ‘at par’ cheque facility extended by Scheduled Commercial Banks not only for their own use but also for their customers, including walk-in customers for facilitating their remittances and payments. 2. Keeping in view the systemic and supervisory concerns that emanate from such an arrangement, RRBs/StCBs/CCBs are advised to utilize the ‘at par’ cheque facility only for: i) their own use, ii) their account holders who are KYC compliant provided that all transactions of ` 50,000.00 or more should be strictly by debit to the customer’s account, iii) walk-in customers against cash for less than ` 50,000.00 per individual. 3. In order to utilise the ‘at par’ cheque facility in the above manner, RRBs/ StCBs/ CCBs should maintain i) records pertaining to issuance of ‘at par’ cheques covering inter alia applicant’s name and account number, beneficiary’s details and date of issuance of the ‘at par’ cheque. ii) sufficient balances/drawing arrangements with the commercial bank extending such facility for purpose of honouring such instruments. RRBs/StCBs/CCBs should also ensure that all ‘at par’ cheques issued by them are crossed ‘account payee’ irrespective of the amount involved. 4. RRBs/StCBs/CCBs are advised to make use of more efficient means of remittances for the customers like NEFT or RTGS by providing such services directly or by becoming sub-members of banks providing such services as per regulations in this regard issued by RBI from time to time. Yours faithfully, (A.G. Ray) General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/344 · issued 29 Oct 2013. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Restrict 'at par' cheque issuance to own use, KYC-compliant account holders (with debit for ₹50,000+), and walk-in cash under ₹50,000.
📜 Compliance
  • 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.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Branch Manager at a bank this circular applies to (Regional Rural Banks (RRBs), State and Central Cooperative Banks (StCBs/CCBs), Scheduled Commercial Banks extending 'at par' facilities), your first concrete step on “RBI tightens 'at par' cheque usage for RRBs and cooperative banks” is: “Restrict 'at par' cheque issuance to own use, KYC-compliant account holders (with debit for ₹50,000+), and walk-in cash under ₹50,000.” (RBI issued this 29 Oct 2013).

  1. Circular: RBI/2013-14/344 -- RBI tightens 'at par' cheque usage for RRBs and cooperative banks
  2. Issued: 29 Oct 2013
  3. Action required: Restrict 'at par' cheque issuance to own use, KYC-compliant account holders (with debit for ₹50,000+), and walk-in cash under ₹50,000.
  4. Action required: Maintain detailed records of each 'at par' cheque including applicant name, account number, beneficiary, and date.
  5. Action required: Ensure all 'at par' cheques are crossed 'account payee' and have sufficient balance/drawing arrangements with the commercial bank.
  6. Action required: Promote NEFT/RTGS or sub-membership for efficient remittances instead of 'at par' cheques.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8538&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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