KARACHI, May 23: The State Bank on Thursday stopped banks from issuing rupee traveller cheques (RTCs) of more than Rs10,000 denomination. The SBP said in a statement it has directed all the banks to immediately recall all unissued or unsold RTCs of more than Rs10,000 denomination and intimate the position to SBP’s Banking Policy Department.

The central bank said the guideline issued on Thursday aims at preventing the use of RTCs for settlement of undocumented transactions “which may also facilitate money-laundering.”

The SBP has asked the banks to issue public notices directing RTC holders to either encash or return the unused RTCs of more than Rs10,000 denomination for change into lower denomination or refund. This exercise should be completed within six months.

It has also asked them to ensure that at the time of issuance of RTCs for cumulative amount higher than Rs10,000 proper identification of the purchase should be obtained and placed on record. National tax number and national identity card number may establish somebody’s proper identification.

The State Bank has also asked the banks to immediately report to its Banking Policy Department the name of the persons to whom rupee travellers cheques totalling Rs500,000 and above have been issued in sequential order.

The SBP has advised the banks that they should accept for payment only those rupee traveller cheques, which bear the signature of the purchaser and are countersigned by the holder.

The central bank has also asked the banks to report to it their outstanding RTCs in the footnote to their weekly statements.

“The State Bank encourages the use of rupee traveller cheques for the travelling public (only) and has, therefore, directed the banks that while advertising the rupee traveller cheques...they should emphasize its utility only for travel or travel related purposes.”