RBI makes it mandatory to mention buyer's name on demand draft to curb money laundering
The decision has been taken to address the concerns arising out of the anonymity provided by payments through demand drafts and its possible misuse for money laundering. The new rule will be applicable from September 15.
In a series of measures taken by the Reserve Bank of India to make banking instruments safer and stronger, the central bank on Thursday said it has decided to make it mandatory to mention the name of a purchaser on the face of a demand draft (DD) at a bank branch. In the current 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," the RBI said in a statement.
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.
Many of such frauds are committed by finding loopholes in the banking instruments such as demand draft. With the government taking tough stance on corruption and bank-related frauds, the RBI too has stepped up 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.