As per the existing directive, banks are not allowed to issue fresh cheque books in the event of cheque dishonor valuing Rs 1 crore and above on four occasions during a financial year for want of sufficient funds.
Also, in such cases the bank may consider closing the current account at its discretion.
The RBI said it has reviewed these instructions and it will be now up to the discretion of banks how to respond in such cases.
“Banks should put in place an appropriate policy approved by the board or its committee taking into consideration the need to prevent misuse of cheque drawing facility and avoid penalising customers for unintended dishonour of cheques,” the RBI said in a notification.
The RBI also asked the banks to make this policy transparent and bring it to the knowledge of the customers.