What changed
RBI observed that some banks have recently issued demand drafts of Rs 50,000 and above against cash deposits, violating long-standing instructions from April 1991. The central bank has now reiterated that these instructions must be strictly complied with, warning that any breach will be treated as a serious regulatory concern.
What it means for you
Banks must immediately stop any practice of issuing high-value demand drafts against cash. This reinforces anti-money laundering and financial integrity measures. Non-compliance could invite regulatory action, including penalties. Lenders need to tighten internal controls and staff training to ensure adherence.
What you must do
- Review and reinforce internal processes to ensure no demand draft of Rs 50,000 or above is issued against cash.
- Train all branch staff and cash management teams on the mandatory requirement to debit customer account or accept a cheque/instrument for such drafts.
- Conduct an internal audit to identify any past violations and take corrective action immediately.
- Report any observed non-compliance to the compliance head and ensure escalation to RBI if required.
Who it affects
All scheduled commercial banks (excluding RRBs), Branch operations teams handling demand drafts, Compliance and audit departments, Retail and corporate banking customers purchasing high-value drafts
Can a customer still get a demand draft of Rs 50,000 or more by paying cash?
No. RBI has reiterated that such drafts must only be issued by debiting the customer's account or against a cheque or other instrument. Cash payment is not allowed.
What are the consequences if a bank violates this rule?
RBI has stated that any violation will be viewed seriously and may lead to regulatory action, including penalties.
Does this rule apply to all types of banks?
Yes, it applies to all scheduled commercial banks, excluding Regional Rural Banks (RRBs).