RBI allows RRBs for third party account pay in drafts

The Reserve Bank of India (RBI) today allowed regional rural banks (RRBs) to collect account pay drafts, pay orders for crediting proceeds to third party accounts with certain restrictions.

Till date, it was only allowed in case of cheques.

As per the central bank, the account payee cheques or demand drafts or pay orders should not exceed Rs 50,000 for crediting it to third party account. Also, the account payee should be a customer of these cooperative credit societies.

"RRBs may note that the... Prohibition and relaxation shall also extend to drafts, pay orders and bankers’ cheques," the central bank said in a notification today.

Earlier, the RBI has put restriction on crediting proceeds to third party accounts by regional rural banks after the misuse of such fund transfer during initial public offers way back in 2006.

Subsequently, it had relaxed norms for such third party account pay up to Rs 50,000 if the member belongs to the cooperative credit society.