A stale, corrected cheque presented for immediate credit
A customer, Rakesh, presents a cheque for ₹47,500 at your counter on 22 July at 11:20 a.m. The cheque is drawn on another bank's branch in a different city and is dated '14 April' of the current year. The amount in words reads 'Rupees Forty Seven Thousand Five Hundred only' and agrees with the figures. The date field also carries a small overwritten correction, initialled in the same hand as the drawer's signature. Rakesh's account with you is 20 days old. He says his UPI daily limit is exhausted and he needs the money today, and offers to 'leave the cheque with you as security' if you credit his account immediately. Your bank is a CTS member, today's outward clearing cut-off of 11:00 a.m. has already passed, and the next presentation is tomorrow at 11:00 a.m.
1. Is this cheque payable if presented tomorrow? Decide, and show the date arithmetic and the effect of the overwritten date.
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Not payable - it is stale. A cheque is valid for three months from the date written on it. Dated 14 April, it ceases to be valid on 14 July; presented on 22 July or on 23 July it is beyond its validity by more than a week. The return reason is 'stale / out of date'.
The overwritten date does not rescue it. A correction in a material field such as the date must be authenticated by the drawer's initials, and here the initials appear to match the signature, so the alteration is not the ground of return. The problem is the date that results: 14 April, not a later date. A presenting bank also cannot assume the original date was different - the image shows what it shows.
Practical point: presenting a stale instrument only generates a return, return charges and a delay for the customer. The instrument should not enter the clearing file at all; it is returned across the counter with the reason recorded. The drawer must issue a fresh cheque with a current date, and the customer should be told this in writing so the refusal is documented.
2. Rakesh wants immediate credit, offering to leave the cheque 'as security'. Explain what your bank's collection rules permit, and identify the risk signals in his request.
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A cheque is a mandate to collect, not money. Credit is given only on realisation, after the presenting bank receives funds through CTS clearing, so the earliest realistic credit is the working day following acceptance and clearing. 'Leaving the cheque as security' is meaningless - the bank already holds the instrument until it is realised or returned; holding it does not convert it into a secured advance.
Immediate credit, where a bank's board-approved collection policy allows it, is confined to low-value local clearing items below a small ceiling, and certainly does not extend to ₹47,500 against an account with no held balance. Even where such a facility exists, a returned cheque is debited back with charges.
Risk signals: an account 20 days old, urgency driven by an exhausted UPI limit, an offer to pledge the instrument, and an unusual amount. This pattern matches cheque-deposit fraud and mule-account use. Do not credit, do not promise value, note the interaction in the account record, and treat subsequent high-value deposits into this account with enhanced monitoring.
3. How will you dispose of the instrument and what will you tell Rakesh, given that he may insist on its being taken 'for collection anyway'?
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Preferred disposal: return it across the counter with a return memo stating 'stale cheque / out of date', entered in the inward register with the time and the officer's initials. Give Rakesh the memo copy so he can show the drawer.
If he insists on collection, the bank may accept it as an agent, but only after he signs an acknowledgement that collection is subject to realisation, that return charges as per the tariff will be recovered from his account, and that no credit or advance will be given against it. That written acknowledgement is what protects the branch when the cheque comes back.
Do not hold the cheque in the branch without a collection entry, and do not issue any written assurance of credit. Explain the arithmetic plainly: valid till 14 July, today is 22 July, so the drawer's bank will return it. Advise a fresh cheque dated on or after the date of issue, and if the amount is still needed urgently, discuss a properly sanctioned facility instead of relying on an uncleared instrument.