RBI/2011-12/ 250

DBOD.BP.BC. No. 49 / 21.01.001/2011-12                                                                                                                        November 4, 2011

The Chairmen / Chief Executives of All Scheduled Commercial Banks (excluding RRBs)

Dear Sir,

Issue of Demand Drafts for Rs. 20,000/- and above

As banks are aware, instruments with account payee crossing are required to be credited to the payee's account and not paid in cash over the counter. However, some unscrupulous elements use demand drafts without any crossing for transfer of money as an alternative to settlement through cash.

2. In order to address the regulatory concerns that have arisen in this context, banks are advised to ensure that demand drafts of Rs. 20,000/- and above are issued invariably with account payee crossing.

Yours faithfully,

(Deepak Singhal)

Chief General Manager -In - Charge.

Account payee crossing requirement: banks must issue demand drafts above the specified threshold with crossing to prevent cash misuse. Banks must issue demand drafts of Rs. 20,000 and above with account payee crossing to prevent their misuse as substitutes for cash; uncrossed drafts used to transfer money should be avoided, and crossed instruments must be credited to the payee's account rather than paid in cash over the counter.