FROM SEPT 15
RBI directs banks to put purchaser’s name on DD
TIMES NEWS NETWORK
Mumbai: 13.07.2018
In a bid to curb money laundering using anonymous demand drafts (DDs), the RBI has made it mandatory to incorporate the name of the purchaser on the face of the financial instrument.
In a circular issued to all banks on Thursday, the RBI said that in order to address concerns arising out of possible misuse of anonymous DDs for money laundering, it has been decided that the name of the purchaser be incorporated on the face of DDs, pay orders, banker’s cheques and similar instruments. The order takes effect for such instruments issued on or after September 15, 2018.
Although the government has barred the use of cash in high-value transactions, tax avoiders have managed to work around this by purchasing DDs. Also, these drafts have been used by tax avoiders for purchase of benami property. Bankers say
that it is quite likely that there might be restrictions on use of third party-purchased DDs in some transactions. They say that use of banker’s cheques for payments by institutions has come down due to use of electronic fund transfers.
Although cheques are more transparent from a compliance point of view, the government often insists on DDs in tenders to ensure that only serious buyers participate. Such drafts also help in speedy realisation of funds as compared to cheques when issued from out of town. Education institutions also ask for DDs to ensure that cheques do not bounce.
According to sources, there is a big market for DDs that can be purchased without a PAN card. These are made out in the name of jewellers and the demand has increased after the government barred use of cash for purchase of jewellery.
RBI directs banks to put purchaser’s name on DD
TIMES NEWS NETWORK
Mumbai: 13.07.2018
In a bid to curb money laundering using anonymous demand drafts (DDs), the RBI has made it mandatory to incorporate the name of the purchaser on the face of the financial instrument.
In a circular issued to all banks on Thursday, the RBI said that in order to address concerns arising out of possible misuse of anonymous DDs for money laundering, it has been decided that the name of the purchaser be incorporated on the face of DDs, pay orders, banker’s cheques and similar instruments. The order takes effect for such instruments issued on or after September 15, 2018.
Although the government has barred the use of cash in high-value transactions, tax avoiders have managed to work around this by purchasing DDs. Also, these drafts have been used by tax avoiders for purchase of benami property. Bankers say
that it is quite likely that there might be restrictions on use of third party-purchased DDs in some transactions. They say that use of banker’s cheques for payments by institutions has come down due to use of electronic fund transfers.
Although cheques are more transparent from a compliance point of view, the government often insists on DDs in tenders to ensure that only serious buyers participate. Such drafts also help in speedy realisation of funds as compared to cheques when issued from out of town. Education institutions also ask for DDs to ensure that cheques do not bounce.
According to sources, there is a big market for DDs that can be purchased without a PAN card. These are made out in the name of jewellers and the demand has increased after the government barred use of cash for purchase of jewellery.
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