Showing posts with label draft validity. Show all posts
Showing posts with label draft validity. Show all posts
Tuesday, January 24, 2012
Cheques Validity Cut Short
We all know what a cheque is and how to use it. You can revisit the post titled “Using a Bank Cheque” to know more about the same. To revisit the post click here
Ok, coming back to topic, as you might already know, Cheques have a validity period after which it is worthless. Such a cheque is called a STALE cheque or an EXPIRED cheque. If you had read my previous post, you will know that cheques are valid for 6 months or 180 days from the date of cheque issue. However, with a recent RBI Ruling, this is set to change.
Reduction in a Cheques Life-Span
Starting 1st April 2012, all cheques and drafts issued by banks in India will be valid only for 3 months. This essentially means that, you can cash cheques or drafts only for 90 days from the date of issue (date on the cheque) and beyond the 3 month duration, the cheques are considered stale and would be worthless.
Why this sudden ruling?
The Reserve Bank of India (RBI) has said that, some people were taking undue advantage of this long (180 day/6 month) validity period and floating/circulating these instruments in the market like cash. So, in the interest of public safety, the RBI has reduced the validity of such instruments to 3 months from the date of issue.
From When is this Validity Ruling Effective?
All cheques and drafts issued in India dated 1st April 2012 or later will have this validity ruling. Banks will also have to mention this 3 month validity condition in all cheques and drafts issued by them.
How does this affect us?
If you are someone who uses cheques for making payments on your credit card or for an occasional transaction with a friend or a relative, this ruling has no effect on you. In almost all cases, we usually cash the cheque as soon as we get it. However, for people who accept post dated cheques for loan repayments or for any other reason, this ruling comes as a huge blow. They have to closely track the expiry date of these instruments and cash them on time in order to receive the payment.
Happy Using Cheques!!!
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