Mumbai : The Reserve Bank of India with its Ho in Mumbai, has reduced the cheques /D Ds period of validity from original 6 months to 3 months , with immediate effect as a fair trial.

This will have tremendous effect on clearing houses, where various banks bring their cheques on other banks than their  own, and get them cleared daily at on stroke in the afternoon on a working day, through their individual representatives. A cheque drawn will be valid till 3 months, but so long as funds are in the account of the drawer. These may be local, on the same branch, same town , as up country(outside the town ) cheques, to clear the amount in favour of the drawce .

In case of DD`s, which  are orders to pay by a bank on its branch anywhere for founds payable on presentation, the payee cannot present it for founds after 3 months, from the date of DD, with 3 days of grace.

 The days of a bill market (hundis) and for cheques issued for collection are new over, as cash is insisted upon.

These cheques and DD`s would be worth only Rs 20,000, and beyond that they will go into a bank (crossed)account .

This done by RBI this week onwards, as a measure to prevent  irregularities  and bad business, says an official release on Sundays last. The rule comes  into full effect from 01-04 2012 . It will be printed on DD or cheques, as notification by banks.

Black many used to the regularized by way of DD system, which was objected to IT(Income –tax )department as a hoodwinking transaction.

To popularise banking/account holding system among citizens/ rural people, an account above Rs 20,000 will have to be banked into an account by the payee  by a crossed cheque/DD. The next 5 months (Nov`11 to March`12) will be used to practise these rules, becoming totally effective as on 01- 04 2012 for the new economic year all over India.