The electronic images of the cheques along with the MICR (magnetic ink character recognition) data and relevant information (date and name of the bank) will be sent to the clearing houses which will process and transmit them to the paying bank. Under the CTS system, the collecting bank will capture images of the cheques by scanning them.
The entire process involves physical movement of cheques and could take three days or more.
At present, any person or institution can present a cheque to the collecting bank, which then sends the cheque to a clearing house for onward transmission to the paying bank. To understand the new CTS system, one must first look at the existing process of cheque transaction. The RBI said non-CTS 2010 standard cheques would continue to be accepted by the clearing houses, “but will be cleared at less frequent interval” and the modalities and charges (if any) were being discussed with the stakeholders.Īccording to the Indian Banks’ Association, the shift to a new system of clearing cheques will help to reduce transaction time and incidence of fraud, besides saving manpower and cost. However, through a circular issued on December 14, it extended the deadline to March 31, 2013, following requests from banks and NBFCs. The apex bank had earlier set December 31, 2012, as the deadline for the implementation of the new cheque standards across all banks and NBFCs. If you are looking to write a cheque or planning to encash from April 1, 2013, make sure your cheque complies with the Reserve Bank’s Cheque Truncation System (CTS) 2010 standards. Does Your Cheque Book Comply With The New Standards Set By The Reserve Bank? Pinak Ghosh Helps You To Find Out
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