In a bid to curb money laundering, the Reserve bank of India ( RBI ) has mandated that the name of a purchaser must be mentioned on the face of a demand draft (DD) at a bank branch.
In the present form, only the name of a person in whose favour a DD is to be prepared is mentioned on it. The apex bank has also decided to include pay order and bankers cheques under the new rule from September 15.
“To address the concerns arising out of the anonymity provided by payments through demand drafts and its possible misuse for money laundering, it has been decided that the name of the purchaser be incorporated on the face of the demand draft, pay order, banker’s cheques, etc, by the issuing bank. These instructions shall take effect for such instruments issued on or after September 15, 2018,” a Notification issued by the RBI said last day.
Section 66 of the Master Direction on KYC dated February 25, 2016, as amended on April 20, 2018, has been amended accordingly.
The central bank has asked all the banking institutions to comply with the new guidelines. A total of 5,152 cases of fraud involving over Rs 28,459 crore were reported in various banks of the country in the past year from April 2017 to March 1, 2018.
Th move aims to remove the exploitation of loopholes in the current law regulating the banking instruments such as demand draft. As the Government become more vigilant on corruptions and bank related frauds, the RBI too become taking some strong security measures to curb illegal flow of money.
Some of these measures include remittance of DD above Rs 50,000 by debit or cheques, issuance of small funds against cash even if a customer has an account in some other bank, and acceptance of small denomination notes for the issuance of DD, etc.
