RBI/2010-11/ 222
DBOD.BP.BC.No.47/ 21.01.001/2010-11
October 1, 2010
The Chairmen/Chief Executives of
All Scheduled Commercial Banks
(excluding RRBs & LABs)
Dear Sir
Collection of third party account payee cheques –
Prohibition on crediting proceeds to third party accounts
Please refer to our circular DBOD.BP.BC.No.32/21.01.001/2009-10 dated August
27, 2009 on the captioned subject, in which it has been stated that the practice
of collection of cheques crossed ‘account payee’ through third party accounts
(of co-operative credit societies) is not permissible. However, to facilitate
collection of cheques from a payment system angle, it has been clarified therein
that sub-members of the clearing houses may collect the cheques of their
customers for the credit to their accounts through the sponsor member, under
certain circumstances referred to therein.
- It has been brought to our notice that since co-operative credit
societies are not even sub-members of clearing houses, members of such
co-operative credit societies who do not have bank accounts have
difficulties in collection of account payee cheques drawn in their name.
With a view to mitigate the difficulties faced by the members of
co-operative credit societies in collection of account payee cheques, it is
further clarified that collecting banks may consider collecting account
payee cheques drawn for an amount not exceeding Rs.50,000/- to the account
of their customers who are co-operative credit societies, if the payees of
such cheques are the constituents of such co-operative credit societies.
While collecting the cheques as aforesaid, banks should have a clear
representation in writing given by the co-operative credit societies
concerned that, upon realization, the proceeds of the cheques will be
credited only to the account of the member of the co-operative credit
society who is the payee named in the cheque. This shall, however, be
subject to the fulfillment of the requirements of the provisions of
Negotiable Instruments Act, 1881, including Section 131 thereof.
- The collecting bank shall also carry out proper due diligence with
respect to such co-operative credit societies and ensure that KYC documents
of the customers are preserved in the society's records and are available to
the bank for scrutiny.
- The collecting banks should, however, be aware that in the event of a
claim by the true owner of the cheque, the rights of the true owner of the
cheque are not in any manner affected by this circular and banks will have
to establish that they acted in good faith and without negligence while
collecting the cheque in question.
Yours faithfully,
(B. Mahapatra)
Chief General Manager-In-Charge