Question

What is the validity period for cheques and bank drafts now?

• A. 6 months
• B. 5 months
• C. 3 months
• D. 2 months

Hint:

The RBI cut this validity period through a rule that took effect on 1 April 2012.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
The question asks for the current validity period of cheques and bank drafts, after a rule change made by the Reserve Bank of India.

Step 2: Key Formula or Approach:
Recall the RBI circular that shortened the life of negotiable instruments to reduce misuse of old, stale cheques and drafts.

Step 3: Detailed Explanation:
Earlier, cheques, drafts, pay orders and banker's cheques stayed valid for 6 months from the date they were issued.
The RBI felt that a 6 month window left room for fraud through alteration or misuse of old instruments, so it ordered banks to cut this period to 3 months.
This new rule of 3 months validity took effect from 1 April 2012 and applies uniformly across banks in India.
Options like 5 months and 2 months were never part of any actual RBI notification, so they can be ruled out directly.

Step 4: Final Answer:
The validity period for cheques and bank drafts now is 3 months.