RBI Makes SMS Alerts For Cheques Transactions Mandatory

Indian Banks will now start sending SMS alerts to both payer & drawer in cheque transactions as soon as the instruments are received for clearing.

Expressing concern over the rise in cheque-related fraud cases, the Reserve Bank of India (RBI) has made SMS alerts mandatory for such transactions.

RBI has also asked banks to alert a bank customer with a phone call & obtain confirmation when dealing with suspicious or / high-value cheques. Until now, SMS alerts were mandatory only for card transactions.                                                            
"The rise in the number of cheque related fraud cases is a matter of major concern. It is evident that many of such frauds could have been avoided had due diligence been observed at the time of handling and/or processing the cheques and monitoring newly-opened accounts," RBI said in a circular to all banks.

RBI has said banks that clearing cheques should not be a mere mechanical process & banks should bestow special attention on the quality of equipment & personnel deployed for cheque clearing.

Besides sending alerts, banks have been asked to ensure that all cheques of more than Rs. 2 lakh are scanned under an ultraviolet lamp that will highlight any tampering.

In case of cheques of over Rs 5 lakh, banks have been asked to scrutinize them at multiple levels.



Although crossed cheques do leave a better money trail that can be investigated, fraudsters have managed to encash cheques by presenting them into accounts opened fraudulently.

The additional rules come at a time when banks are expected to open many crore new accounts & many of them are under relaxed know - your-customer (KYC) norms.

The RBI has said that while crediting high-value cheques, banks should ensure that the recipient's account is KYC-compliant.


"It has been reported that in some cases, even though the original cheques were in the custody of the customer, cheques with the same series had been presented and encashed by fraudsters. In this connection, banks are advised to take appropriate precautionary measures to ensure that the confidential information, viz. customer name / or account number / or signature, cheque serial numbers& other related information are neither compromised nor either from the bank or / from the vendors' (printers, couriers, etc) side," the RBI told. 
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