The government on Wednesday said the Reserve Bank has decided to reduce the validity of cheques and bank drafts from the present six months to three months beginning next fiscal year.
The Reserve Bank of India (RBI) has advised that with effect from April 1, 2012, banks should not make payments against cheques, drafts, pay orders or banker’s cheques if they are presented after the period of three months from date of issue, the minister of state for finance Namo Narain Meena said in a written reply to the Rajya Sabha on Tuesday.
“It was reported to Central Economic Intelligence Bureau (CEIB) that some persons are taking undue advantage of the practice of banks of making payment of cheques or draft presented within a period of six months from the date of the instrument as these instruments are being circulated in the market like cash for six months,” he said.
Subsequently, CEIB constituted an Inter-Ministerial Group (IMG) on ‘Street Financing’ which recommended reducing the validity period of the cheques or drafts, he added.