Due to the lockdown, economic activities have slowed down and business are gasping for financial and economic support.
Amidst this, demand had been raised by some section of the businesses that a cheque’s validity should be increased, to help the borrowers get more time for repayment of the cheques already issued.
One such petition was filed in the Supreme Court, and the verdict has been given.
This is what the Supreme Court has said.
Supreme Court: Cheque’s Validity Will Not Extend
Responding to the petition for changing rules and laws under the Banking Regulation Act for extending a cheque’s validity due to the coronavirus impact, Supreme Court has given its verdict.
No, the validity of the cheque issued in India won’t be extended.
The Bench comprising of Justices R Subhash Reddy and AS Bopanna have accepted RBI’s recommendations related to the petition, and has refused to extend the validity of cheques.
What Is The Validity Of Cheques Issued In India?
As per Section 35A of the Banking Regulation Act, RBI has fixed the validity of cheques to 3 months from the date of issue.
And there will be no change in this.
During the hearing, Supreme Court has ordered that all banking and financial institutions in India follow the 3-month validity of a cheque, and there is no need to change the status-quo.
Why do Some Businesses want To Extend Checque’s Validity?
Mainly because of financial strains and lack of income right now.
A bounced cheque is a criminal offense in India, and can be made punishable for 2-years.
Now in case a lender has made a payment by cheque, and there is no money in the bank account, then the cheque will bounce.
And if the bank account doesn’t get a sufficient amount in 3 months, then the cheque will expire, and reputation of the lender will suffer.
Hence, by extending the validity of a cheque in these distress times, some businesses and representatives asked for additional time to make the pending payments.
But no such amendments will be made, and the validity of a cheque remains the same: 3 months.
We will keep you updated, as more details come in.
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