Jul. 1 – The Reserve Bank of India has released a circular advising that new regulations on issuing checks will be effective starting December 1 and not July 1 as announced earlier.
The directive instructs banks not to clear checks with overwriting and checks with changes made to the amount or the payee’s name despite a validating signature next to it. Only changes made in the date will be allowed.
The move is aimed at cutting down on fraud and improving clearing time for checks. In India, some checks use the check truncation system wherein an image of check is sent to clearing house for transfer of funds.
Checks that use Magnetic Ink Character Recognition (MICR) or non-MICR system are excluded in the new regulation. In addition, the new rules will not apply to those availing of an over-the-counter collection of funds or direct collection of checks beyond the Clearance House Arrangement.
