RBI ASKS BANKS TO GIVE REASONS FOR RETURNING CHEQUES

Keeping in view the larger interests of customers, the Reserve Bank of India (RBI) asked banks to inform account holders on the reasons for a cheque being returned or dishonoured.

Banks are advised to indicate the date of return in the 'Cheque Return Memo' without fail, the RBI said in a statement.

The memo that should accompany a cheque dishonoured or returned for any reason is a critical document, more so in case recourse to legal action is necessitated, it said.

Instruments returned unpaid should have a signed objection slip on which a definite and valid reason for refusing payment must be stated, it said.

Certain instances of banks not mentioning the date of return on the cheque return memo have been brought to RBI's notice, it said.

Source: http://www.business-standard.com/india/news/rbi-asks-banks-to-give-reasons-for-returning-cheques/107659/on