Crediting Proceeds to Third Party Account
Collection of Account Payee Cheques, Drafts, Pay Orders and Bankers’ Cheques and Prohibition on Crediting Proceeds to Third Party Account.
As per circular DBOD.BP.BC.No.56/21.01.001/2005-06 dated January 23, 2006:
- Banks are prohibited from crediting 'account payee' cheques
- to the account of any person
- other than the payee named therein.
RBI reiterate that banks shall strictly adhere to the instructions and not collect account payee cheques for any person other than the payee constituent.
However, with a view to mitigate the difficulties faced by the members of co-operative credit societies in collection of account payee cheques, relaxation was extended vide circular DBOD.BP.BC.No. 47/21.01.001/2010-11 dated October 1, 2010.
Therefore, banks may consider collecting account payee cheques:
- drawn for an amount not exceeding Rs.50,000/-
- to the account of their customers
- who are cooperative credit societies,
- if the payees of such cheques are the constituents of such co-operative credit societies.
Now, RBI has issued circular DBOD.BP.BC.No. 50 / 21.01.001/2011-12 dated November 4, 2011 and stated that the above prohibition and relaxation shall also extend to drafts, pay orders and bankers’ cheques.
NOTE: This is applicable to all Scheduled Commercial Banks excluding Regional Rural Banks (RRBs).