Will speed up clearing, save costs for banks

From January 1, it will be mandatory to use only new cheque leaves that are compliant with the technology that enables their scanning and transmission online. The process is speeded up by what is called a cheque truncation system (CTS).

More than 60 per cent of bank account holders are, however, not aware of the rule, and have not picked up new cheque books from their bank branches.

This is despite mailers and text messages sent to individual customers, advertisements in newspapers and ‘notices’ put up at the branches, say the managers of various banks Business Line spoke to.

Standard cheques

“We have also been informing our customers whenever they come to our bank that, as per RBI guidelines, non-CTS 2010 compliant cheques will not be accepted from January,” said a branch manager of a nationalised bank in the city.

The RBI has advised all banks in the northern and southern regions that offer their clients the cheque facility to issue only ‘CTS-2010’ standard cheques to their customers from April 2012. And all other banks were expected to follow this from September 30. However, most banks started issuing CTS cheque books from mid-September.

Cheques are still the prominent mode of payment in the country.

The cheque truncation system was introduced to improve the efficiency of the cheque clearing-cycle. In the current system, cheques deposited for clearing are physically moved to the RBI, and from there to the respective bank’s clearinghouse in a specific city and then to the specific branch.

In the CTS system, only the scanned image of the cheque will travel online. This, in addition to huge savings on logistics expenses and travelling time, will also help banks rationalise human resources.

It will also bring down the cheque-handling time for a bank as the scanned image will bring the specimen signature of the issuer along with it on the screen. More important, the consumer will benefit as it will cut down the cheque realisation time to almost real-time levels.

This system has already been in practice in a few cities such as Delhi, Chennai and Bangalore. Other cities are to be brought on board in phases. Hyderabad, for instance, is moving to CTS from next week.

Unique features

To facilitate the transformation to an image-based processing scenario, cheque leaves are required to be image-friendly and uniform. Over a period of time, banks have added a range of design patterns to their cheque design for branding exclusivity and identification.

Otherwise, CTS 2010-compliant cheques are designed uniformly in terms of size, paper quality and fields such as the MICR band, and the signature and date details.

Besides, security features such as watermarks, and the bank’s logo (invisible to the naked eye) are also standardised in the new cheque leaves.

ravikumar.ramanujam@thehindu.co.in

(This article was published on December 9, 2012)
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