Now banks will not need to return paid government cheques to the concerned departments
Presently Cheque Truncation System (CTS) is used to clear cheques that facilitates presentation and payment of cheques without their physical movement. However, with regard to government cheques, they need to be sent back in physical form after the payment has been made to the government departments.
Accordingly, government cheques would be paid in CTS clearing based on their electronic images. If any drawee bank wants to verify government cheque in physical form before passing it for payment, the image would be returned unpaid under the reason 'present with documents'.
The presenting bank shall ensure that the instrument is presented again in the next applicable clearing session without any reference to the account holder. Further both the presenting and draweee banks need to preserve the cheques for a period of 10 years. In case some specific cheques are required for the purpose of any investigation, enquiry, etc, under the law, they may be preserved beyond 10 years.
Also, government cheques paid by a drawee bank across its counter by cash withdrawal or transfer also needs truncation and preserved for 10 years and the drawee bank should continue to send the payment scrolls, monthly DMS, to government department.
They should ensure that the mistakes/discrepancies pointed out are rectified as per procedure, missing images of paid cheques are submitted immediately, and the copies of the scrolls duly verified by the PAO are kept on its record."
Further, if required government may request for any paid cheque in physical form for reconciliation, enquiry, investigation.