Dear Rajesh

I was earlier working for a finance comoany and we used to take not one but 12
blank cheques. Every time there would be a default we would present a cheque to
file a case of cheque dishonour which is a criminal offence.

I believe the bank is within it's right to keep a blank cheque. However the
bank should also acknowledge to you in writing the conditions under which the
blank cheque will be used. The bank should also confirm that in the event there
is a misuse of the cheque they will compensate you for losses.

Once you have gotten a letter as above from the bank there should be no
worries as long as you have an honest intention of clearing the banks loans on
time

Best Regards

The Bank has no legal right to keep a blank cheque as security.if it
has done with the consent and knowledge of the account holder the
Account Holder has all the legal and moral right to instruct his
Bank to stop payment, before it is presented, by giving it in
writing his intention to stop payment of cheque.Even under the
negotiable instruments act if stop payment instructions are given to
the bank no criminal action can be initiated. The Bank already has a
Agreement, Undertaking and two guarantors who guarantee that the
Loanee will pay the loan.So a blank cheque is invalid
document.Liable to be returned uncleared when presented for
payment.Still get hold of a good Lawyer and brief him in advance
about this.Take his legal opinion and if he suggests file a
N.C.,/F.I.R.,at the local Police station.(Local means where the bank
is situated) against the bank for forcing you to sign a blank cheque.

Any business of blank cheques is illigal. Just like taking a peper with blank
signatures

m.m.sethi

Hi Rajesh,

Banks do keep blank cheques as security against loan so they don't have to run
behind your guaranteers for youe defaulted payments.

Typically, the bank will deposit a cheque in case your 3 EMI's are missed.
(This is NOT a rule and could vary from bank to bank!)

In case you are going for a 12 month loan, you are asked to give 4 blank
cheques.
As a prudent citizen, you should write on the cheque "NOT MORE THAN Rs. XXX"
where XXX = emi x 4 months

While I wholeheartedly agree that giving blank cheques is scary, esp. to goon
banks ...fact remains in today's world we'd personally think hard before loaning
even 500 rs. to someone we know. And the bank loans us respectable amount which
they have to recover!

Cheers,

My bank is also asking me to issue them 7 blank cheques for using ECS facility. Is it that banks discourage consumers to use ECS facility? The general rule of a banker is always issue a cheque with a date and amount wriiten.
Then how can a bank ask for undated blank cheques. Is this part of any banking rules to take blank undated cheques from customers?
Is this acceptance of blank cheques by banks has the consent of RBI? Almost every bank asks for balnk cheques. Will any bank themselves issue any blank cheque?

What does the law say on this? OR Does this happen only in India?

Qs.1 Can the bank misuse 'The blank Cheque' taken against the bill or wishes of the loaning who availed personal loaanding n during emergency of exegencies period to meet his domestic requirement due to five succsessive deths of five members in near relation or in family. If so can the bank fill whole outstating loan amount in 'The Blank Cheque' to claim debt?

Qs.2 If bank is not legally authorised to misuse 'The Blank Cheque' then what action can be taken against nationalised bank under the Indian Law? Can Loanee claim damages or F.I.R. against bank which has issued notice to the loanee under section 138 of NI act 1881?
'Facts of the Case' I availed Rs. 1Lac. as personal Loan & deposited some portion of loan in installments. Later, bank misused my blank cheque putting entire outstanding loan amount getting dishonoured it from its branch, issued notice undersection 138 directing to pay the cheques amounts within 15 days if I do not deposit the amount it will be a criminal offense kindly guide me further action immediately.
Thanks
Mr. Ramesh Vashishtha,Hisar

Prosecution ruled out in blank cheque bounce cases
Saturday, Feb 20, 2010 at 0139 hrs IST
Bombay High Court | Law And Order | Blank Cheque Bounce Case

The Bombay High Court has held that if a blank, post-dated cheque—which has been issued only as a ‘collateral security’ for a loan—bounces, the debtor cannot be prosecuted under the Negotiable Instruments (NI) Act.

for further clarifications: call : dr.b.n.soans at 09245201687
Very often banks take blank, post-dated che-ques from borrowers as a security for repayment. Criminal case under the NI Act cannot be lodged if such cheques bounced, Justice PR Borkar held in his judgement last week.

The judgement could be a jolt for private banks, but public sector banks wouldn’t be affected by it, says MR Umarjee, chief legal advisor, Indian Banks’ Association. “I don’t think the Bombay HC judgement will have any implication in the case of state-owned banks, as they don’t ask for such blank cheques from their borrowers. Yes, those banks that ask for blank cheques may be affected by this judgement.

Other bankers contacted by FE refused to comment on the development, saying they have not gone through the judgement.
The judgement was passed on a petition filed by Ramkrishna Urban Cooperative Credit Society (RUCCS) in Ahmednagar district.

RUCCS had given a loan of Rs 2 lakh to a person named Rajendra Varma in 2000. Varma had issued 10 blank post-dated cheques at the time as a security for repayment.

One of these cheques, dated January 2008, bounced following which RUCCS filed criminal complaint against Varma. However, the magistrate's court held that Varma was not guilty under the NI Act and acquitted him. The society filed an application in Aurangabad bench of High Court seeking its permission to file appeal in sessions court.

The High Court noted that the NI Act was intended to give more credibility to cheque as a financial instrument; “However, the object was not to provide effective and speedy remedy for recovery of loans,” it said. “Law makers must not have intended or imagined that money lenders or banks would obtain blank or post-dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of NI Act,” Justice Borkar held, dismissing the application.
“It is doubtful if provisions of Section 138 attracted to a case in which a blank or post-dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan,” the judge said.

“In this case, the accused respondent issued the cheque in question as security for loan before loan amount was disbursed. So, cheque was not towards any existing debt or liability (which is a requirement under Section 138),” the high court observed, confirming the order of acquittal....

One of my friend named Abhilash given me a sequrity cheque , but he alredy stopped that chequ with a reason cheque was lost,