There have been some Recent Changes in Banking that have come out and I thought I might take sometime to let my readers know about them. While some of them might not really affect you, it’s wise to keep it at the back of your mind so that you end up as a wise and informed investor.
Let me know what to think of the these.
Recent Changes in Banking
Cheque, draft valid only for 3 months now
Effective April 1st 2012, the Reserve Bank Of India (RBI) will be bringing down the validity of cheques, drafts, pay orders and banker’s cheques to 3 months instead of the current 6 months.
RBI noticed that these instruments were literally being used as cash and being rotated in the market during this validity period of 6 months. Stressing upon the fact that this decision was made in the public interest and in the interest of banking policy, RBI has asked banks to inform holders of such instruments of the validity by printing suitable instructions on the instruments issued on or after April 1, 2012.
Open bank account with other states’ identity proof
This will be a welcome news to people looking to open a no frills bank account. The government has asked banks to accept identity proof which is issued in another state to open a no frills bank account in some other state.
Though relaxed KYC norms were put in place for no frills account sometime back, it wasn’t implemented by all the banks – those that did implement used self declarations to open the bank accounts in case of absence of identity proof. Those that didn’t instead began asking for local address proof and photo identity from the person to open the account.
Scores of people who travel across states to earn their livelihood will now find it easy to open their account as almost all of them will have a valid identity proof of some state or the other.
Rules on repayment of FDs made easier now
In case you have a fixed deposit (FD) which was opened with “either or survivor” instructions, then when it matures, RBI has said that signature of both parties is not needed for repayment of the maturity money.
While that looks like a dumb ruling, in practice some banks were actually insisting on signature from both parties before the money could be paid. This led to investors complaints and dissatisfaction so RBI has stepped in to make things more clearer.
RBI has said that :
# If the operating instruction is “either or survivor” :
– on maturity, one signature is enough for repayment.
– however, if one of the depositors expires before maturity, agreement of legal heirs of the deceased joint holder is needed.
# If the operating instruction is “former or survivor” :
– only the former can operate or withdraw the amount when both of them are alive.
– signature of both is needed if premature withdrawal is made.
– however, if the former expires before maturity, the survivor can withdraw the money on maturity.
Hey thanks for these info.
@Sudip D, And you are welcome – does nay of them affect you at all ? You like them, your don’t ?
@Radhey Sharma, Yes, I like them. The second one would greatly help to the mass. But had it been the address proof then it would have been of more benefit because for identity most of the people use PAN Card or driving license or Passport which is on a national level & can be used anywhere but for address banks require proof of local address only which many cannot furnish as they live in hostel/pg/rented apartments.
Radhey,
Thanks for the information. I think RBI should have kept the validity of the cheques/drafts to 6 months. Most of the dividend cheques sent by the companies(unless ECS) are received after two months only. The companies print the cheques and keep and send it on a later date.
Point 2 and 3 are very good too.
Rakesh
@Rakesh, Good point Rakesh! This is indeed a fact that the cheques send via snail mail are generally received quite a few weeks late.
@Rakesh, That is a valid point Rakesh, never thought of it.
I just got a notification from my bank about cheque validity to remain for 3 months.
So what to do in case we get a cheque that is 3 months old? Run behind the issuer? IT department cheques are always lagging behind and extremely difficult to follow-up with. I know ECS is starting to pick-up but I have refund pending even before 2006/07 when it started.
@Vivek,
At this moment we have no choice but to follow-up. I did receive a dividend from a company via cheque rather than ECS which was over 3 months old. As it was Rs. 20 i did not bother to follow-up.
You mentioned you have refunds pending before 2006-07 that’s quite strange.
@Rakesh, Yes it is strange but I am not surprised, what else you expect from IT department? It actually fell off my radar and I didn’t follow-up, it’s time that I do now.