If your bank has been refusing to accept cheques for amounts that include fraction of a rupee, it's against the rules and the bank should be penalised. In an internal circular issued earlier, the Reserve Bank of India (RBI) had warned that banks which refuse to accept cheques on such grounds from customers will be sternly dealt with.

Vasudev Thakkar, who had approached a bank to deposit a cheque for Rs 5,687.89 was asked to issue a fresh cheque with the figure 'rounded off' to the rupee. The public sector bank even showed Thakkar an internal circular which clearly stated that cheques for amounts that included fraction of a rupee should not be accepted. But Thakkar, who was there to pay the bill of a utility service, was unwilling to spoil another cheque.

A few months back, he filed an RTI application with the bank and another with the RBI to know whether such internal circulars hold ground. "The RBI gave me copies of a March 2007 circular bearing the number RBI.No.2006-2007/299 which clearly stated that banks caught not accepting such cheques will be heavily penalized. The circular also warned all banks that stern action should be taken against employees who refuse to accept such cheques. With such stringent rules in place, banks cannot ask customers to round off amounts on cheques to the nearest rupee," said Thakkar.

The RBI circular was issued by chief general manager, P Vijaya Bhaskar. It referred to a high court ruling of February 2007 in which Justice RS Garg had said: "The RBI is hereby directed to issue fresh notifications/notices to all the banks, who have issued internal circulars, not to receive such cheques, etc. and see that stern action is taken against the persons who refuse to receive the cheques/drafts which are in fragments."

Justice Garg further stated in his order: "No Bank can say that it would not receive one rupee note or five rupees notes. A bank is a banker on whom the customer banks upon. A bank cannot say that it would receive only big notes and rest is to be circulated in the market. If a customer goes to the bank and says that he wants to deposit a sum of Rs1 Lakh in five-rupee notes, the bank, the clerk, the cashier cannot say that they would not receive it." (Times of India)