Corrections or alterations on cheques prohibited from 1 December: RBI

The Reserve Bank of India (RBI) has prohibited alterations or corrections on cheques effective 1 December 2010. RBI has asked all scheduled commercial banks, including RRBs, urban co-operative banks, state co-operative banks and district central co-operative banks, not to accept such cheques from the effective date of implementation.

The RBI issued the directive on the basis of recommendations of a working group constituted to examine the need for standardisation of cheque forms and enhancement of security features.

RBI said the measure has been introduced to curtail cheque frauds on account of alterations in the various fields of cheques and to give protection to customers as well as banks.

This will be applicable only for cheques cleared under the image-based Cheque Truncation System (CTS). Collecting banks should ensure, ab initio, that such cheques are not accepted for presenting in CTS.

It will not also apply to cheques cleared under other clearing arrangements such as MICR clearing, non-MICR clearing, over the counter collection (for cash payment) or direct collection of cheques outside the clearing house arrangement.

RBI has asked banks to ensure that adequate care is taken to educate the customers and to create awareness among them so that the entire process is carried out in a smooth manner. The Indian Banks' Association and the National Payments Corporation of India will issue separate communication regarding the issue, RBI said.