Collection of third party account payee cheques – RBI Prohibits crediting proceeds to third party accounts

The practice of collection of cheques crossed ‘account payee’ through third party accounts (of co-operative credit societies) is not permissible. However, to facilitate collection of cheques from a payment system angle, sub-members of the clearing houses may collect the cheques of their customers for the credit to their accounts through the sponsor member, under certain circumstances.
Reserve Bank of India has notified that collecting banks may consider collecting account payee cheques drawn for an amount not exceeding Rs.50,000/- to the account of their customers who are co-operative credit societies, if the payees of such cheques are the constituents of such co-operative credit societies. While collecting the cheques as aforesaid, banks should have a clear representation in writing given by the co-operative credit societies concerned that, upon realization, the proceeds of the cheques will be credited only to the account of the member of the co-operative credit society who is the payee named in the cheque.

Source : Banknet India
However, RBI has clarified that in the event of a claim by the true owner of the cheque, the rights of the true owner of the cheque are not in any manner affected and banks will have to establish that they acted in good faith and without negligence while collecting the cheque in question.




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