Instead of the physical cheque, an electronic image of the cheque is transmitted to the drawee branch, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.
A number of other countries followed over the next few years, but progress was mixed due to the decline in the use of cheques generally in favour of electronic payment systems. Your CTS cheque book clearly shows the place where you have to sign in cheque. While the existing cheque standard was supposed to be phased out from circulation beginningthe Reserve Bank of India RBI extended the deadline to 31st March 13 based on representations by some banks as they needed more time to set up the systems.
Shorter clearing cycle Superior verification and reconciliation process No geographical restrictions as to jurisdiction Operational efficiency for banks and customers alike Reduction in operational risk and risks associated with paper clearing Also, to reiterate, scope for frauds are minimum under the CTS regime, which is good for banks.
Cheques not complying with CTS standards will be cleared at less frequent intervals i. The bank where this cheque is deposited is known as the collecting bank. History[ edit ] To settle a cheque, it has to be presented to the drawee bank for payment.
Southern gridnorthern grid, western grid. That was one helluva CTS related piece.
Timing of P2F Weekdays: Feb 05, Truncation literally means stopping or cutting short. And if you hold any post-dated cheques beyond 31st March you will have to arrange to get it replaced with a new Cheque Truncation System cheque. This is so because we are now introducing technology in cheque clearing system.
According to CTS, the presenting banks which truncate the cheques will have to preserve the physical cheque for a period of 10 years. There is an inbuilt function in scanner application that automatically checks the quality of image, and if quality is not as per standard, it will automatically marks that cheque for P2F.
Go to TOP When scanning of outward cheque is completed, a report of P2F generated and we have to take out all P2F instrument from the bunch of cheque which we have scanned. The Electronic images of the cheques are captured for processing.
Hence, there are chances of multi-city cheques getting cleared on the same day, going forward. The law also enacted the recognition and acceptance of a " substitute check " created by a financial institution in lieu of the original paper check. In some cases, large retailers that received large volumes of cheques would do the truncation.
The liquidity of the economy will be generally improved because of the reduction of the clearing cycle. While submitting cheque in bank try to use all pins rather staple. Cheques had to be examined by hand at each stage, which required a large amount of manpower.
In grid several state are combined to from single grid. The Cheque Truncation System was evolved to overcome the limitations of the earlier cheque clearing system that required several days of clearance.
Benefits to Account Holders Since there is no physical movement of cheques, there is no fear of loss of cheque in transit.
When the deadline expires, the old cheque books will no longer be valid. Thus, offering CTS is an alternative. The CTS-compliant cheques are prone to fewer frauds and hence are more secured than the old cheques.
The security, integrity, non-repudiation and authenticity of the data and image transmitted from the paying bank to the payee bank are ensured using the Public Key Infrastructure PKI. In inward clearing, the items received from branches are processed in the service branch where the operator performs amount entry, account entry, item verification, balancing and bundling of the items.
I decided on this topic because many friends of mine, who faced interviews in the last 1 year, have been asked about it — either the basics or the detailed process. A number of other countries also adopted the system over the next few years, but progress was mixed due to the decline in the use of cheques generally in favour of electronic payment systems.
Hence Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank. In addition to this, obviating the need to move physical cheques is extremely beneficial in terms of saving cost and time for banks. The biggest advantage is that CTS-compliant cheques are more secure than old cheques and, hence, less prone to frauds.
The security, integrity, non-repudiation and authenticity of the data and image transmitted from the paying bank to the payee bank are ensured using the Public Key Infrastructure PKI. So, the RBI has decided to focus on improving efficiency of the cheque clearing cycle.
Banking product specialist, especially in IT related banking system solutions. Solution that we carry has been used in 90% of Cheque Clearing and Processing in Indonesia.
Cheque Truncation System (CTS) End to End Cheque Processing Solution. Cheque processing is a business process that persists to involve various complex issues. Just to outline a few: Rejection rates still remain high due to poor technology applied in either MICR encoding or MICR reading. Types of retail payment systems.
Cheque Truncation and Conversion System (CTCS) BNM had implemented the Cheque Truncation and Conversion System (CTCS) in the Klang Valley and neighbouring states to replace the previous Sistem Penjelasan Imej Cek Kebangsaan (SPICK) cheque clearing system on 13 June Reserve Bank of India (RBI) has been in the forefront of adopting technology for making the payment systems in the country efficient, modern and robust.
Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a project of the Reserve Bank of India (RBI), commencing infor faster clearing of cheques.
CTS is based on a cheque truncation or online image-based cheque clearing system where cheque images and magnetic ink character recognition (MICR) data are. Thus, truncation of cheque means stopping the flow of the physical cheque by the presenting bank (bank where the cheque is presented/dropped off!) en-route to the drawee bank’s (bank on which the cheque is drawn on) branch.Cheque truncation system