DBOD. Dir. BC. 70/13.01.01/
March 30, 2007
All Commercial Banks
off cheques to the nearest rupee
Please refer to paragraph
19 of our Master Circular DBOD
Dir. BC. 6/13.03.00/2006-07dated July 1, 2006 on 'Interest Rates on Deposits',
in terms of which banks were advised that all transactions, including payment
of interest on deposits/charging of interest on advances, should be rounded off
to the nearest rupee; i.e., fractions of 50 paise and above shall be rounded off
to the next higher rupee and fraction of less than 50 paise shall be ignored.
It was also advised that issue prices of cash certificates should also be rounded
off in the same manner. Banks were however, advised that cheques issued by clients
containing fractions of a rupee should not be rejected or dishonoured.
We advise that recently a case involving refusal by a bank to accept a draft drawn
in fraction of a rupee lodged for collection to the credit of Government account
came up before the High Court of Gujarat, Ahmedabad. The High Court of Gujarat,
taking a serious view in the matter, has directed Reserve Bank of India to take
appropriate steps in the matter in accordance with law, in the light of the extant
instructions referred to in paragraph 1 above and, if required, issue fresh notifications/
notices to all the banks who have issued internal circulars not to receive such
cheques, etc., and see that stern action is taken against the persons who refuse
to receive the cheques/ drafts, which are drawn in fractions of a rupee. Banks
are therefore advised to ensure that cheques/ drafts issued by clients containing
fractions of a rupee are not rejected or dishonoured by them. Banks may also review
the practice being followed by them in this regard and take necessary steps, including
through issue of internal circulars, etc, to ensure that the concerned staff are
well versed with these instructions so that the general public does not suffer.
Banks may also ensure that appropriate action is taken against members of their
staff who are found to have refused to accept cheques/ drafts containing fractions
of a rupee.
3. Please note that
any bank violating the aforesaid instructions would be liable to be penalised
under the provisions of the Banking Regulation Act, 1949.
(P Vijaya Bhaskar)