RBI directed Banks to issue Cheques conforming to Cheque Truncation System 2010 Standard
Economy Current Affairs 2011. Reserve Bank directed all banks to issue cheques conforming to Cheque Truncation System (CTS) 2010 standard
The Reserve Bank on 27 December 2011 directed all banks to issue cheques conforming to Cheque Truncation System (CTS) 2010 standard with uniform features from 1 April 2012 onwards.
All banks providing cheque facility to their customers were advised to issue only CTS-2010 standard cheques not later than 1 April 2012 on priority basis in northern and southern region. The two- northern and southern region will be part of the northern and southern CTS grids respectively. CTS-2010 standard cheques are to be issued by banks across the country by 30 September 2012 through a time bound action plan.
The Indian Banks Association ( IBA) and National Payment Corporation of India ( NPCI) were vested with the responsibility of coordinating and implementing the uniform cheque standard across the country by all participating banks.
Need for the CTS
The introduction of new cheque standards 'CTS 2010' was needed on account of several developments in the cheque clearing: growing use of multi-city and payable-at-par cheques at any branch of a bank, increasing popularity of Speed Clearing for local processing of outstation cheques and implementation of grid based Cheque Truncation System (CTS) for image-based cheque processing etc
Advantage of the CTS
The new cheque standard CTS 2010 with set of minimum security features will ensure uniformity across all cheque forms issued by banks in the country as well as help presenting banks while scrutinising and recognising cheques of drawee banks in an image-based processing scenario, RBI said in a notification.
The homogeneity in security features is also expected to act as a deterrent against cheque frauds. Also, the standardisation of field placements on cheque forms would enable straight-through-processing both under CTS and MICR clearing.
At present in most parts of the country banks have to physically move cheques presented to them for clearing to the clearing house. The cheques are then sent to the issuing banks which verify the signature before releasing the funds. Under RBI cheque truncation programme banks will release payments based on images of cheques conveyed to them.