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Cheque Truncation System (CTS) in India

Posted by drgorg on January 11, 2010 at 11:14 AM

Cheque Truncation System-What is it.?

To improve the efficiency of the Cheque Clearing Cycle, Reserve Bank of India has decided to introduce Cheque Truncation System (CTS) in India. Further, Cheque Truncation is a more secure system than the current exchange of physical documents in which the cheque moves from one point to another, thus, not only creating delays but inconvenience to the customer in case the instrument is lost in transit or manipulated during the clearing cycle.


Cheque Truncation speeds up collection of cheques and therefore enhances customer service, reduces the scope for clearing related frauds, minimizes cost of collection of cheques, reduces reconciliation problems, eliminates logistics problems etc.


The Cheque Truncation System (CTS) was implemented in the National Capital Region in February 2008. Cheque Truncation System (CTS) will be rolled out at Chennai. National roll-out of CTS will be considered once this project is operationalised.


What is it..?


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


The images captured at the presenting bank level would be transmitted to the ClearingHouse and then to the drawee branches with digital signatures of the presenting bank.Thus each image would carry the digital signature, apart from the physical endorsement of the presenting bank, in a prescribed manner.


The criteria for banks participating in the Cheque truncation system are:

  1.  Membership of the clearing house in the NCR.
  2. Membership of the Indian Financial Network (INFINET) In respect of banks who are not members of the INFINET, the following alternatives are available
  1. They may become the sub-members of the direct members or
  2. Such banks may use the infrastructure of the other banks having INFINET membership without being the INFINET members themselves and there clearing settlement can be done either directly or through the member through whom they are participating.

 

The Technological improvments are comming in leaps and bounds in Banks, but are we ready to take on these changes and challanges..?


Just one point at this time to ponder upon..Some BIG Banks are installing Biomatric ATMs, ( works on thumb impression) and not opening the accounts of illiterate poors/ NAREGA,  :)


OK OK, I got it,- may be it is for the Millionares who dont use Cash at all,  with a view to Enhanced security to prevent frauds etc....isnt it..?


Until next time


Bye


Have a tension and stress free time


Satyajit

Artical Courtsey :- news Item from Banknet

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