Buyer’s name to be compulsorily printed on Demand Drafts: RBI moves to plug money laundering avenue

The Reserve Bank of India (RBI) has made it mandatory to mention the name of the person on the front of the demand draft while purchasing it at a bank branch. At present, the DD form only asks for the name of the entity or person in whose favour it is to be prepared.

In order to address the concerns arising out of the anonymity provided by payments through demand drafts and its possible misuse for money laundering, the Reserve of Bank Of India on Thursday the 11th July 2018 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, according to the RBI communication.

RBI guidelines states that banks should ensure that any remittance of funds by way of demand draft, mail/telegraphic transfer or any other mode and issue of travellers’ cheques for value of Rupees fifty thousand and above is effected by debit to the customer’s account or against cheques and not against cash payment. As per RBI guidelines, demand draft of any amount over Rs 50,000 is taxable. Permanent Account Number is not required to be furnished for getting the demand draft below Rs.50000/- .

RBI has been taking several measures to counter money-laundering. When demonetization came into force in November 2016, couple of money laundering cases was detected where certain bank officials in collusion with the culprits issued demand drafts worth several lakhs in new currencies.

RBI's earlier measures
Banks have to ensure that drafts of small amounts are issued by their branches against cash to all customers irrespective of the fact whether they are having accounts with the banks or not. Banks should not refuse to accept small denomination notes from the customers (or non-customers for issuance of the drafts).

RBI has also been taking measures to bring down the incidence of frauds perpetrated through bank drafts built into the draft form itself. All superscriptions about validity of the demand draft need to be provided at the top of the form.

Duplicate draft, in lieu of lost draft, up to and including Rs 5,000 may be issued to the purchaser on the basis of adequate indemnity. Thereafter, banks should issue duplicate demand draft to the customer within a fortnight from the receipt of such request. Further, for the delay beyond this stipulated period, banks were advised to pay interest at the rate applicable for fixed deposit of corresponding maturity in order to compensate the customer for such delay.
Source: - Follow link: Incorporation of Name of the Purchaser on the Face of the Demand Draft

Source: ABP News, Economic Times

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