I think you have raised a very pertinent issue. In this regard, please go through the sanction letter issued to you, which usually contains terms and conditions of sanction. Is it mentioned there that you have to give undated blank cheque. If so and if you have agreed to it then I guess you have no alternative. Other wise if they are orally asking for it, in my view you have following options of recourse:
a) Write a strong letter to bank addressing top management and demanding immediate disbursement and threatening legal action if no action is taken immediately.
b) If nothing happens Immediately file a complaint with Banking Ombudsman for withholding disbursement despite complying with all the terms of sanction and causing financial loss to you; c)Approach some consumer rights organization for necessary guidance d) Go to some other bank
To the best of my knowledge, banks cannot demand undated, blank cheques under limitation act. So it is likely that the bank cannot demand the same in writing. Instruments like undated blank cheques are called Inchoate Instruments in legal parlance and a person who puts an inchoate instrument in circulation must be taken to have authorized what ever is subsequently inserted in it in order to make it a complete instrument. So, if you sign a blank cheque you are giving unlimited powers to your banker. You would also be facing the risk of some employee of the bank misusing the same for personal gain;
Earlier only certain private banks used to resort to such things. Now I guess even nationalized banks have begun this practice. In my view asking for undated blank cheque is quite unnecessary as you will have already singed a Demand Promissory Note which is quite sufficient for their purpose. I think people are blindly signing anything just to get a loan, it is high time some one starts questioning such practices.
