New Delhi: To address concerns about money laundering, the Reserve Bank of India (RBI) on Thursday directed banks to incorporate the name of the purchaser on the face of a demand draft (DD). From September 15, issuing banks have to incorporate the name of the purchaser on the face of a demand draft, pay order and banker’s cheque. The RBI has made the necessary changes in know-your-customer (KYC) norms, which will come into effect from September 15.

In a circular issued to all banks on Thursday, the RBI said: “In order to address the concerns arising out of the anonymity provided by payments through demand drafts and their possible misuse for money laundering, it has been decided that the name of the purchaser be incorporated on the face of the demand draft, pay order, banker’s cheques, etc., by the issuing bank."

Demand drafts or DDs are instruments in which the drawee bank undertakes to make payment when the instrument is presented by the payee. With bank customers switching to online modes like RTGS, NEFT and IMPS, demand drafts are increasingly losing relevance. But for many applications for jobs and admission into educational institutions, demand drafts are still required.

The RBI is taking a continuing series of measures to check money laundering. According to current rules framed by the central bank, any remittance of funds by way of demand draft, NEFT/IMPS or any other mode and issue of travellers’ cheques for value of 50,000 and above shall be effected by debit to the customer’s account or against cheques, not against cash payment.

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