New Cheque Norms: Cheque Truncation System – CTS 2010

                      

What is CTS 2010 Standard (Cheque Truncation system)

Cheque Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point.

In its place, an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.

Hence – Cheque leaf is being redesigned in terms of size, MICR band, quality of paper, etc., to make them of CTS standard, which each bank is doing.

CTS 2010 chequebook has the following distinguishing features:

                •"Please sign above" is mentioned on cheque leaf on the right hand side bottom.

                 

                •Void Pantograph (a wave like design) is embossed on left hand side of Cheque leaf.

                This feature should not be visible on the scanned image but should be clearly visible in photocopies and scanned color images.

                This would act as a deterrent against color photocopy or scanned color images of a cheque.

Advantages of Cheque Truncation system

With the introduction of imaging and truncation,

                •The physical movement of instruments is stopped.

                 

                •Electronic movement of images of cheques speeds up the process of settlement and can facilitate reduction in the clearing cycles as well.

                •There is no fear of loss of instruments in transit.

                 

                •Limitations of the existing clearing system in terms of geography or jurisdiction can be removed.

                •Will Enable consolidation and integration of multiple clearing locations managed by different banks with varying service levels into a nation-wide standard clearing system with uniform processes and practices.

                •Scope of frauds inherent in paper instruments is reduced. Cheque frauds can be greatly reduced with introduction of minimum security features prescribed under CTS Standards 2010, such as embedded verifiable features such as bar-codes, encrypted codes, logos, watermarks, holograms, etc., for early interception of altered / forged instruments.

Importance of filling up the cheques correctly in CTS 2010

                1)Post implementation of the Cheque Truncation System (CTS) 2010 Standard the cheques will not travel physically from one location to another location for clearance, it would be through electronic image transfer from the bank where the cheque is deposited to the drawee bank, This also means even a small mistake on the cheque will result in the cheque not getting cleared.

                 

                2)Also use image-friendly colored inks to write the cheques to ensure good image quality.

                3) In addition, writing the cheque properly also prevents the risk of frauds on your cheques. Not to mention that banks charge a few hundred rupees as a fine, for cheques that get bounced due to non-financial reasons

 Note: Effective 01-01- 2013, Non CTS cheques is not  accepted for any kind of Financial Transaction.