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In this current pandemic scenario of the COVID-19, the whole world is going through this crucial time and facing a severe financial crisis. According to research, India’s GDP growth rate for the current year may be stirring to a zero. So, it became mandatory for the government to take a rapid stimulus step according to the situation. 

In India, there are several steps taken by the government to come out from this recession period. The lockdown impact of the COVID-19 has been largely disruptive and the complete lockdown period has signaled a deep recession. It would result in a sharp loss in the incomes and further weigh on the domestic demand and the pace of recovery. Under complete lockdown, businesses remain closed and the circulation of the liquidity has totally stopped, almost every payment is blocked. Young start-ups have also been impacted as funding has fallen. Due to this complete lockdown, many people have lost their employment and it ultimately leads them towards poverty; many laborers are migrating to their native places for their safety because they all are not even able to bear their rental expenses. Thus, to reduce the financial crisis the government is looking after some tremendous steps.

Extension of cheque s life span- The need of the hour amidst COVID-19

In India as per RBI guidelines, with effect from April 1, 2012, the validity period of cheques, Demand Drafts, Pay Orders, and Banker’s cheque was reduced from 6 months to 3 months, from the date of issue of the instrument. For that decision, RBI said that “some people were taking undue advantage of the long validity period and circulating these instruments in the market like cash for 6 months”. So, in this pandemic situation now RBI must extend in the cheque’s life span to circulating a cash flow in the market, because so many dead instruments are available in the current market due to complete lockdown. In this current situation many creditors/firms/companies having lots of undue instruments, during lockdown many of them were becoming invalid. This will create a fence in their growth line survival in this critical situation.

After demonetization, many small firms/companies were stopped to doing cash payments to small vendors and retailers. All small vendors/firms accepted a cashless system under the Digital India flagship programme. Thus, many companies/firms doing their transactions with cheques. In Fact, the cheque is a very popular and ancient mode of payment. So, in the rural area there are still many areas in which there is a lack of awareness of online transfers like RTGS, NEFT, IMPS, etc. 

Due to this complete lockdown period, many people are unable to go to the banks as every business/office has already closed and all are stuck at their home, Therefore, it is impossible to go to the banks to deposit a cheque on or before due dates. Especially, in the Red zone and Orange zone people are not able to go to the bank or in the offices so, cheque’s that surpass the 3 months’ time period becomes invalid instruments and it results in blockage of funds. Everyone supported this complete lockdown, so now it’s time is to reduce unnecessary business hurdles and re-create a trustworthy and safe market.


Even the most powerful regulatory bank of India (RBI) also announced many relaxation steps that all are helpful to counter the economic impact of this pandemic situation. To circulate more liquidity, RBI has decreased the Repo rates and Reverse Repo Rates. These all will decrease some burden to the economy. For better improvement of trading activities and to reduce pressure from the market, everyone expected relief and relaxation. While announcing of Lockdown 4.0 Indian government announced 20 Lac Crores relief under the package of “Atma - Nirbhar Bharat” in these packages, they declared many relief and relaxations to each and every class of people. These economic relief and some sort of relaxation are appreciable. The government has always striven to provide maximum support to enhance the economic condition. Due to migration of labours many industries are suffering from various types of issues. Due to the scarcity of labour it will create a high demand for labour and it tends to more wages. So, the inflation rates are likely to be going very high in the nearer future.

Many companies, firms, proprietors, and people also have a fear that what about their collections/payments and old debts? Due to these situations, market stability becoming very critical, and also there is a lack of trust about their funds, whether it is safe to have furthermore reliance on the debtor or not; Therefore, liquidity circulation is a mandatory step in this period.

It will be a drastic step towards Indian economic history. Many funding will be regenerated by the extension of the cheque’s life span and it will more helpful to the economy also and it will create more employment so the poverty ratio will be reduced. 


Extension of the cheque's validity span has now become the need of ours in this crucial time. It will be more helpful to small vendors, creditors, and many other corporate companies and also to all business models. Hope the government will understand this serious matter and take the necessary step to boost up the activities and once again the economic engine will be back on track.

Note: Suggestions/Opinion Expressed is restricted to the Author's View. It does not lead to any Financial Advice.

The author can also be reached at dharakhakharia2@gmail.com


Published by

Dhara Khakharia
(Credit Controller)
Category Professional Resource   Report

2 Likes   1 Shares   1968 Views


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