22 Dec, 2012 04:27 PM

Understand the new cheque books / Cheque Truncation System (CTS)

Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a project undertaken by the Reserve Bank of India – RBI, for faster clearing of cheques. CTS is basically an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically.

Truncation means, stopping the flow of the physical cheques issued by a drawer to the drawee branch. The physical instrument is truncated at some point en route to the drawee branch and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc.

Cheque truncation, would eliminate the need to move the physical instruments across branches, except in exceptional circumstances. This would result in effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing, etc., thus speeding up the process of collection or realization of cheques.

But what is different or should be different in your new, regulation compliant cheque book?

Most of the new features have been introduced to make the cheque payments a more secure and universalized mode of payment.

The idea according to RBI was triggered by growing use of multi-city and payable-at-par cheques at any branch of a bank, increasing popularity of Speed Clearing for local processing of outstation cheques andhence, implementation of grid based Cheque Truncation System (CTS) for image-based cheque processing

We give you a lowdown on the changes.

The IFSC and MICR codes, predictably are a must on every cheque leaflet.
All cheques shall carry a standardised watermark, with the words "CTS-INDIA" which can be seen when held against any light source. This would make it difficult for any fraudster to photocopy or print an instrument.
Bank's logo shall be printed in ultra-violet (UV) ink. The logo will be captured by / visible in UV enabled scanners / lamps.
Background of cheques shall be kept as clutter free as possible for improving quality and clarity of images.
No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee's name, amount in figures or amount in words, etc., fresh cheque forms should be used by customers.
"payable at par at all branches of the bank in India" text will be at the bottom of all the cheques.
There should also be words 'please sign above this line' at the right bottom corner of the cheque. The customers will also be required to use a darker ink for their signatures on the cheque so that the signatures are scan-able.