What changed
Previously, banks paid cheques/drafts presented within six months of issue. RBI, under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies), has reduced this period to three months for instruments dated April 1, 2012 or later. The change aims to curb the practice of instruments being used as quasi-cash for extended periods.
What it means for you
Co-operative banks must update their cheque books, drafts, pay orders, and banker's cheques to reflect the three-month validity. This reduces the window for fraud or misuse of stale instruments. Banks need to notify account holders and ensure operational systems enforce the new deadline from the effective date.
What you must do
- Print or stamp 'valid for three months from date of issue' on all cheque leaves, drafts, pay orders, and banker's cheques issued on or after April 1, 2012.
- Update internal systems and teller procedures to reject instruments presented beyond three months from the date of issue.
- Communicate the change to all account holders through notices, SMS, or account statements well before April 1, 2012.
- Acknowledge receipt of this circular to your respective RBI Regional Office.
Who it affects
State Co-operative Banks (StCBs), District Central Co-operative Banks (DCCBs), Customers holding cheque books, drafts, pay orders, or banker's cheques from these banks
Does this apply to instruments issued before April 1, 2012?
No. The directive applies only to cheques, drafts, pay orders, and banker's cheques bearing a date of April 1, 2012 or later. Instruments issued earlier continue with the six-month validity.
What if a customer presents a cheque after three months but before six months?
From April 1, 2012, banks must not pay such instruments if they are presented beyond three months from the date of issue. The earlier six-month practice is replaced.
What legal backing does this directive have?
RBI issued this under Section 35A of the Banking Regulation Act, 1949, as applicable to co-operative societies, which empowers RBI to issue directions in public interest and banking policy.