KYC/AML Standards/Combating Financing of Terrorism/Obligation of Banks under PMLA, 2002 - ‘At par’ cheque facility extended to Cooperative Banks/RRBs by Scheduled Commercial Banks

RBI/2013-14/344 RPCD.CO.RRB.RCB.BC.No. Cir.No. 48/07.51.010//2013-14 October 29, 2013 The Chairman All Regional Rural Banks (RRBs) All State and Central Co-operative Banks (StCBs and CCBs) Dear Sir, Know Your Customer (KYC)/Anti Money Laundering (AML) Standards/Combating Financing of Terrorism (CFT)/ Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 ‘At par’ cheque facility extended to Cooperative Banks / Regional Rural Banks by Scheduled Commercial Banks It has been observed that some banks are utilizing ‘at par’ cheque facility extended by Scheduled Commercial Banks not only for their own use but also for their customers, including walk-in customers for facilitating their remittances and payments. 2. Keeping in view the systemic and supervisory concerns that emanate from such an arrangement, RRBs/StCBs/CCBs are advised to utilize the ‘at par’ cheque facility only for: i) their own use, ii) their account holders who are KYC compliant provided that all transactions of `50,000.00 or more should be strictly by debit to the customer’s account, iii) walk-in customers against cash for less than `50,000.00 per individual. 3. In order to utilise the ‘at par’ cheque facility in the above manner, RRBs/ StCBs/ CCBs should maintain i) records pertaining to issuance of ‘at par’ cheques covering inter alia applicant’s name and account number, beneficiary’s details and date of issuance of the ‘at par’ cheque. ii) sufficient balances/drawing arrangements with the commercial bank extending such facility for purpose of honouring such instruments. RRBs/StCBs/CCBs should also ensure that all ‘at par’ cheques issued by them are crossed ‘account payee’ irrespective of the amount involved. 4. RRBs/StCBs/CCBs are advised to make use of more efficient means of remittances for the customers like NEFT or RTGS by providing such services directly or by becoming sub-members of banks providing such services as per regulations in this regard issued by RBI from time to time. Yours faithfully, (A.G. Ray) General Manager