Cheques containing fractions of Re not be rejected: Reserve Bank of India
If your bank has been refusing to accept cheques for amounts that include fraction of a rupee, itâ€™s against theÂ rulesÂ and the bank should be penalized.
In an internal circular issued earlier, the Reserve Bank of India (RBI) had warned that banks which refuse to accept cheques on such grounds from customers will be sternly dealt with.
According to an RBI circular issued in March 2007 (RBI.No.2006-2007/299), banks were advised that cheques issued by clients containing fractions of a rupee should not be rejected or dishonoured.
The RBI circular was issued by chief general manager, P Vijaya Bhaskar. It referred to a High Court ruling of February 2007 in which Justice RS Garg had said: â€œThe RBI is hereby directed to 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 in fragments.â€
Justice Garg further said in his order: â€œNo Bank can say that it would not receive one rupee note or five rupees notes. A bank is a banker on whom the customer banks upon. A bank cannot say that it would receive only big notes and rest is to be circulated in the market. If a customer goes to the bank and says that he wants to deposit a sum of Rs. 1 Lakh in five-rupee notes, the bank, the clerk, the cashier cannot say that they would not receive it.â€
On â€˜Interest Rates on Depositsâ€™, 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.