PROPOSAL FOR INTRODUCTION OF ONLINE VERIFIED CHEQUES AND CHEQUE GUARANTEE SYSTEM IN INDIA

By: Vinay Dadmal
House No. 55, Swarajnagar, Behind Omkarnagar,
Manewada Ring Road, Nagpur – 440027, Maharashtra, India

Place: Nagpur
Date: 04.11.2026

To

1. Governor

Reserve Bank of India (RBI)
Central Office Building, Shahid Bhagat Singh Marg,
Mumbai – 400001, Maharashtra, India
Email: crpc@rbi.org.in

2. Secretary

Department of Financial Services (DFS)
Ministry of Finance, Government of India
Jeevan Deep Building, Parliament Street,
New Delhi – 110001
Email: secy-finance@nic.in

3. Secretary

Ministry of Electronics and Information Technology (MeitY)
Electronics Niketan, 6 CGO Complex, Lodhi Road,
New Delhi – 110003
Email: contact@meity.gov.in

4. Managing Director & CEO

National Payments Corporation of India (NPCI)
1001A, B Wing, 10th Floor, The Capital, Bandra Kurla Complex,
Mumbai – 400051
Email: contact@npci.org.in

5. Chairman

Indian Banks' Association (IBA)
World Trade Centre Complex, Centre 1 Building, 6th Floor, Cuffe Parade,
Mumbai – 400005
Email: iba@iba.org.in

6. Chairman

State Bank of India
State Bank Bhavan, Madame Cama Road,
Mumbai – 400021
Email: customercare@sbi.co.in

7. Managing Directors / CEOs

All Scheduled Commercial Banks, Small Finance Banks, Payments Banks and Cooperative Banks of India.

Subject:

Proposal for Introduction of RBI-Regulated Online Verified Cheques, Digital Cheque Guarantee System and Electronic Delivery of Cheques through Mobile Number, WhatsApp and Email

Respected Sir/Madam,

India has made remarkable progress in digital payments through UPI, IMPS, NEFT, RTGS and the Cheque Truncation System (CTS). However, the conventional cheque remains an important legal and commercial instrument, particularly for post-dated transactions, rentals, business payments, security deposits, instalments and contractual obligations.

I respectfully propose the introduction of an Online Verified Cheque System (OVCS) and Cheque Guarantee System (CGS) as an optional digital facility in addition to the existing cheque system.

The proposal does not seek any change in the existing printed cashable cheques which should continue exactly as at present and remain payable at bank counters and through CTS clearing.

Proposed Features

1. Online Generation of Cheques

A customer should be able to generate a cheque digitally through:

Mobile Banking App
Internet Banking
Bank Branch
Authorized Banking Kiosk

The electronic cheque should contain:

Unique cheque number
Name of issuer
Name of payee
Amount
Date of payment
Account details
Digital authentication by issuing bank
QR code and verification reference

2. Delivery of Online Cheques

After issuance, the cheque should be deliverable through:

Registered Mobile Number
WhatsApp Number
Email Address
Secure Banking Notification
SMS Link

Accordingly, a customer may issue a cheque directly to a beneficiary using:

Mobile Number of recipient
WhatsApp Number of recipient
Email ID of recipient

The recipient may electronically deposit the cheque into the desired bank account.

3. Bank Verification Before Issue

Before issuing the electronic cheque:

Bank should verify customer identity.
Bank should verify account status.
Bank should verify availability of funds and assets.
Digital authentication should be attached by the issuing bank.

This would significantly reduce fraudulent and fake cheque issuance.

Cheque Guarantee System

4. Amount Blocking Feature

The most important reform proposed is a Cheque Guarantee System.

Where a cheque is issued for a future date:

For short duration cheques

Banks may block the entire cheque amount in the customer's account until maturity.

For long duration post-dated cheques

Banks may allow:

Blocking of funds;
Creation of lien;
Marking of fixed deposits;
Marking of recurring deposits;
Marking of overdraft limits;
Marking of approved credit facilities;
Marking of other eligible banking assets.

Such assets may act as security backing the cheque.

This will substantially improve confidence in cheque transactions.

5. Cheque Guarantee Certificate

Banks may issue a digitally signed:

"Cheque Guarantee Certificate"

containing:

Cheque Number
Guaranteed Amount
Validity Period
Asset Backing Information
Issuing Bank Authentication

This certificate may accompany the cheque.

Auto Presentation and Settlement

6. Automatic Presentation

On the due date:

The payee's bank may automatically present the cheque.
Clearing may occur electronically.
Funds may be released instantly if blocked.
No manual physical submission should be necessary.

7. Deposit into Any Bank Account

The recipient should be allowed to deposit the online cheque into:

Own savings account
Current account
Joint account
Escrow account
Institutional account

subject to KYC requirements.

Benefits

The proposed system shall provide:

To Customers

No loss of physical cheque
No theft of cheque leaves
No courier expenses
Faster collection
Better legal proof
Convenience of issuance through mobile devices

To Banks

Reduced fraud
Reduced processing cost
Enhanced digital banking ecosystem
Better audit trail

To Businesses

Secure post-dated cheque mechanism
Improved credit discipline
Better contractual enforcement

To Government

Promotion of Digital India
Reduced paper consumption
Transparent payment ecosystem
Stronger financial inclusion

Legal Examination Requested

I further request RBI, DFS, NPCI, MeitY, IBA and all banks to examine:

Whether electronic verified cheques can be fully implemented under existing laws.
Whether amendments to the Negotiable Instruments Act may be required.
Whether a Cheque Guarantee Framework can be legally introduced.
Whether mobile number, WhatsApp number and email-based cheque delivery can be recognized.
Whether funds and other banking assets can legally be blocked as security against future-dated cheques.
Whether digital dishonour notices can be recognized under law.

Conclusion

India has already successfully implemented digital payment systems and cheque image processing through CTS. The next logical step is creation of an Online Verified Cheque System with Cheque Guarantee Features while preserving the existing physical cheque system.

Such an optional facility can make cheque transactions faster, safer, paperless and more reliable without disturbing existing customers who prefer conventional printed cheques.

I therefore request all concerned authorities to examine this proposal and initiate discussions for pilot implementation across India.

With regards,

Vinay Dadmal
House No. 55, Swarajnagar, Behind Omkarnagar,
Manewada Ring Road, Nagpur – 440027, Maharashtra, India