Your old cheque leaves may not be valid after March 31, 2013, as the RBI has instructed all banks to implement the Cheque Truncation System (CTS) across the country. This calls for your immediate action to make sure that your cheque book is CTS compliant.
What CTS is
Under the CTS system, the physical movement of cheques between banks will be eliminated.
Normally, when you issue a cheque to someone, he presents the cheque in his bank to get the credit.
The cheque then moves physically from his bank to your bank which involves a lot of time and risk. RBI recognised the disadvantages of this old system and brought about CTS, where instead of the physical movement of the cheque, an electronic image of the cheque is transmitted to the drawee branch.
The presenting bank (which is the bank of the person to whom you had issued the cheque to) retains the physical cheque.
Along with the electronic image, certain key relevant information is also transmitted, such as date of presentation, presenting bank details, data on the MICR band.
The CTS-2010 is not just a change in the process of cheque clearing. The change in the system is apparent even on the cheque leaf you use.
A CTS compliant cheque leaf is different from a normal cheque leaf you currently use, and has certain distinct features.
Cheque printer details: This is printed on the extreme left hand side of the cheque.
The printer details along with the words ‘CTS-2010’ is mentioned along the area where you tear off the leaf from the cheque book.
Rupee symbol: The new symbol of the Indian rupee is printed beside the area where the amount in figures needs to be written.
Details of the bank and its logo: The bank details and its logo are printed on the face of the cheque. However, it is printed in invisible ink.
Signature space indicator: The words ‘please sign above’ are mentioned indicating the space where you will need to sign the cheque.
VOID pantograph: This is a wavelike design, which is visible to the naked eye and seen below the area where the account number is printed.
CTS-compliant cheques are safer than old cheques.
The scope for committing frauds is greatly reduced due to the various security checks in place. The CTS helps in speedy clearance of cheques resulting in faster credit to your account. This is because there is no physical movement of cheques and hence time is saved. Further, the absence of physical movement also eliminates the risk of loss of cheque in transit. The different locations are proposed to be integrated under this system in order to cut geographical restrictions in cheque clearing.
You must first ensure that you use only CTS-2010 compliant cheque leaves from January 1, 2013. You can check if you hold a CTS compliant cheque book by verifying if the cheque leaves have the features mentioned above. You need to apply in your bank for the same and it is available free of cost.
If you have any unused cheque leaves with you, these must be surrendered in your bank. Another critical area to take note of is that you must exchange any old post-dated cheques you may have given to anyone, which are dated after January 1, 2013, with new CTS-compliant cheques immediately. These may include post-dated cheques given for your home loan or auto loan too. RBI has advised to preferably use dark coloured ink while writing CTS cheques.
(The writer is CEO, BankBazaar.com)
(This article has been corrected for error.)