DD against cash payment:HC notices to RBI, IBA and govt

Last Updated 24 January 2019, 19:58 IST

The Karnataka High Court on Thursday issued notices to the Reserve Bank of India (RBI), the Indian Banks’ Association (IBA) and the state government over the inaction of the public sector banks in issuing demand drafts (DD) against cash payments unless the customers had bank accounts.

The court was hearing a PIL challenging the same. A division bench headed by acting Chief Justice L Narayana Swamy was hearing a petition filed by advocate Ramesh Naik.

Naik moved court seeking directions to all the public sector and commercial banks to follow their own direction pertaining to the ‘issue and payment for demand drafts’, and not to create hardship for the customer by insisting him/her to have a mandatory bank account or demanding only cheques for issuing demand drafts up to any amount less than Rs 50,000.

The petitioner contended that a large number of people are facing hardship when transacting at public sector banks in their effort to get DDs for even small amounts like Rs 100, 200, 500 or 1000.

On December 24, 2018, the petitioner, in order to ascertain this, had tried to obtain a demand draft for a small amount of Rs 100 in favour of the ‘District Consumer Redressal Forum’ by visiting a few public sector banks. All of them refused to issue the DD stating cash payment cannot be accepted, and the amount should be paid by cheque or the customer should have an account.

The petitioner further added that RBI ‘Master Direction - Know your Customer (KYC) Direction 2016’, provides for the acceptance of cash payments of any amount less than Rs 50,000 for issuing demand drafts.

The petitioner also told the court that The State Bank of India agreed to issue a DD for the amount of Rs 100, after he complained in writing to the manager of the concerned bank.

The DD was issued on submission of the petitioner’s Aadhar card, while refusing to accept any other identity proof.

The petitioner, on December 26, 2018, submitted a representation via e-mail to the jurisdictional banking ombudsman designated for the purpose by the RBI, explaining the issue, and requesting to address the grievance faced by people in obtaining a DD. However no action was taken.

Thereafter the petitioner submitted a representation via e-mail again to the Indian Banks’ Association which again resulted in no response, following which the petitioner approached the court. The court has adjourned the hearing.

(Published 24 January 2019, 19:00 IST)

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