(a)  For the purposes of this section, the term “banking institution” shall mean: (1) Any state or federally chartered bank, savings bank, loan and investment bank, or credit union located within this state; and (2) Any currency-exchange specialist located within this state and enrolled with the department of human services pursuant to regulations to be adopted by the department.

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(b)  Each banking institution shall cash, at its main office or any of its branch offices within the state, any check drawn by the state and payable within the state to a recipient of aid to families with dependent children (AFDC) or general public assistance (GPA), if the check is negotiated to the banking institution by the original payee of the check, and if the payee produces reasonable identification required by this section and as provided for in regulations adopted pursuant to subsection (d) hereof.

(c)  Nothing in this section shall be interpreted as limiting any rights the banking institution may have against the payee by contract or at law, with regard to items that are negotiated to it as provided for in this section, that are not paid upon presentment, or where the payee breaches a warranty made under § 6A-3-417. This section shall not apply to any check negotiated to a banking institution if the institution has reason to believe that the check will not be paid on presentment or that the tendering party may be in breach of one or more of the warranties contained in § 6A-3-417.

(d)  Provided that a banking institution properly employed the identification procedures prescribed in regulations adopted pursuant to this subsection at the time an AFDC or GPA check was cashed by such institution, the state shall honor and make payment on the AFDC or GPA check, and the banking institution shall not be liable to reimburse the state for a loss incurred as a result of the wrongful payment of a check by the banking institution. The director of the department of human services shall adopt regulations specifying: (1) The forms of reasonable identification that a banking institution shall accept when cashing an AFDC or GPA check pursuant to subsection (b); and (2) The identification procedures the institution must employ to receive payment thereon and to avoid liability for the wrongful payment of any such check. The regulations shall provide that the forms of reasonable identification shall include, but need not be limited to: (i) An AFDC or GPA photo-identification card issued by the department of human services; (ii) A valid identification card issued by the administrator of the division of motor vehicles pursuant to § 3-8-6; (iii) A valid driver’s license; (iv) An identification card issued by the office of healthy aging; and (v) A valid identification card issued by the United States Immigration and Naturalization Service.

(e)  The department of human services shall issue a stop-payment order with respect to any AFDC or GPA check reported as lost, stolen, or undelivered. The department of human services shall not issue a replacement AFDC or GPA check for a period of three (3) business days from the date of the report of such loss, theft, or nondelivery.