The Reserve Bank of India in the beginning of
September 2012 has directed all banks in India to issue uniformed featured
cheques which as per specifications of the Cheque Truncation System (CTS)
2010. This is with a view to standardize the procedures and provide a safeguard
against frauds through uniform security features. The RBI also stated that this
move would facilitate the fixed field placement specifications facilitate
straight-through-processing at drawee banks’ end through the use of optical or
image character recognition technology.
What
is Cheque Truncation?
Cheque truncation is the process of stopping
the flow of the physical cheque issued by a drawer at some point with the
presenting bank en-route to the drawee bank branch. In its place an electronic
image of the cheque is transmitted to the drawee branch by the clearing house,
along with relevant information like data on the MICR band, date of
presentation, presenting bank, etc. Cheque truncation thus obviates the need to
move the physical instruments across branches, other than in exceptional
circumstances for clearing purposes. This effectively eliminates the associated
cost of movement of the physical cheques, reduces the time required for their
collection and brings elegance to the entire activity of cheque processing.
How the Cheque Truncation System has
come about to be Implemented?
The Reserve Bank has implemented CTS in the
National Capital Region (NCR), New Delhi and Chennai with effect from February
1, 2008 and September 24, 2011. After migration of the entire cheque volume
from MICR system to CTS, the traditional MICR-based cheque processing has been
discontinued in these two locations.. Based on the advantages realized by the
stakeholders and the experienced gained from the roll-out in these centers, it
has been decided to operationalise CTS across the country. Accordingly, Grid
based CTS clearing has since then been started in in Chennai by including a few
banks from Coimbatore and Bengaluru with effect from March 2012. It has also
been envisaged to bring all the bank branches in the states of Tamilnadu,
Kerala, Karnataka, Andhra Pradesh and the Union Territory of Puducherry under
Chennai Grid in a phased manner.
What is New about this Approach to
Implementation of the Truncation System?
Under this approach the entire cheque volume
in the country cleared across numerous locations will be consolidated into a
much fewer number of grids. The concept of region wise grids will be replaced
and operational freedom will be given to the operator in deciding the number of
grids required to expand the reach of CTS Pan-India and also on choosing the
locations for each grid for optimum use of the resources. Each grid will
provide processing and clearing services to all the banks under its
jurisdiction. Banks, branches and customers based at small / remote locations
falling under the jurisdiction of a grid would be benefited, irrespective of
whether there exists at present a formal arrangement for cheque clearing or
otherwise.
What are the benefits of such a System
to Customers?
The basic purpose of RBI introducing this
system is to help the customers better by:
§ Reducing the scope for
clearing-related frauds or loss of instruments in transit.
§ Lowering of the cost of collection
of cheques.
§ Removal of reconciliation-related
and logistics-related problems.
§ Creation of the capability to enable
inter-bank and customer payments online and in near-real time.
§ Superior verification and
reconciliation process.
§ No geographical restrictions as to
jurisdiction.
§ Operational efficiency for banks and
customers alike.
§ Reduction in operational risk and
risks associated with paper clearing.
What are the Cheques that can be
presented through the CTS?
All types of cheques can be presented for
clearing through CTS. It is in no way different from the use of traditional
clearing infrastructure which has been used for clearing paper cheques. Cheques
presented as part of Speed Clearing are handled in CTS as well. Incidentally,
given the fact that images of cheques (and not the physical cheques) alone need
to move in CTS, it is possible for the removal of the restriction of
geographical jurisdiction normally associated with the paper cheque clearing.
For reaping this benefit, the concept of Grid-CTS clearing is being envisaged
as part of roll-out of CTS at Chennai. Under the grid clearing, cheques drawn
on centers included in the grid will be cleared as part of local clearing.
What are the Changes for the Customers?
There is no change in the clearing process
for customers who can continue to use cheques as at present, except to ensure
the use of image-friendly-colored-inks while writing the cheques. Of course,
such of those customers, who are used to receiving the paid instruments (like
government departments) would also receive the cheque images. Cheques with
alterations in material fields (explained in detail later) are not allowed to
be processed under the CTS environment.
The RBI has made it mandatory for all banks
in India switch over to this new system by 30th September 2012 and
ensure that all non-CTS-2010 standard cheques in circulation are withdrawn
by 31st December 2012. This move shall usher a new era of
banking with cheques in India.
Extracts from : http://www.bankbazaar.com
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