Cheque Truncation System (CTS) in India- An Introduction & FAQs

HOW CTS WORKS FOR BANK CUSTOMER

All the local cheques can be presented in the CTS. Banks may also present cheques on banks situated outside the NCR, but such banks have branches in the NCR region. The CTS also supports the intercity clearing and specialized clearing like high value clearing etc. The on-us instruments where both presenting and drawee banks are same are not allowed in the CTS. Images of such instruments would be stopped at the Clearing House Interface itself.

There will be no change in the clearing process. Customers would continue to use cheques as at present, except in the use of image friendly coloured ink for making the instruments. Of course, such of those customers, who used to receive the paid instruments, like Government Departments, would only receive cheque images instead of the physical instruments. This will also facilitate in better processing at their end, as they will be able to access online images in addition to the data. As the images are going to be moved across, the time taken for the receipt of paid instruments at their end could be reduced so that better and timely control could be exercised over payments. This will also give an early opportunity to the drawers or issuers of cheques to detect frauds or alterations in their cheques.

Bank customers should use image friendly cheques. They should preferably use dark coloured ink while drawing the instruments. Care should be exercised in the use of rubber stamp, so that it would not interfere with the material portions of the cheque. The date of the cheque, payees name, amount and signature are the basic features which are essential in a cheque. The use of rubber stamps, etc, should not overshadow the clear appearance of these basic features in image. In order to ensure that all essential elements of a cheque are captured in an image during the scanning process, bank customers have to exercise appropriate care in this regard.

BENEFIT TO BANK CUSTOMERS



Thus the benefits to customers of banks could be summarized as:

a) Faster clearing cycle;

b) Better reconciliation/verification process

c) Better Customer Service - Enhanced Customer Window

d) T+0 for Local Clearing and T + 1 for inter-city clearing.

e) Elimination of Float - Incentive to shift to Credit Push payments.

f) The jurisdiction of Clearing House can be extended to the entire country - No Geographical Dependence

g) Operational Efficiency will benefit the bottom lines of banks - Local

Clearing activity is a high cost no revenue activity.

h) Minimises Transaction Costs.

i) Reduces operational risk by securing the transmission route.

The physical instruments are required to be stored for a statutory period. It would be obligatory for presenting bank to warehouse the physical instruments for that statutory period. In case a customer desires to get a paper instrument back, the instrument can be sourced from the presenting bank through the drawee bank.

INTRODUCTION;WHAT IS CHEQUE TRUNCATION; CRITERIA OF MEMBERSHIP... Click here

PROCESS FLOW OF CHEQUE TRUNCATION; INFRASTRUCTURE REQUIRED; IMAGE SPECIFICATIONS... Click here

(Source- RBI)

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