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Existing cheque clearing arrangement will continue till year end

Existing cheque clearing arrangement will continue till year end

Good news for those having non CTS cheques left for clearing. RBI has declared that the existing cheque clearing system will continue till year end. Non-CTS-2010 cheques (Cheque Truncation System) will continue to be cleared even after the deadline of July 31, 2013. However,banks must continue to make efforts to withdraw the non-CTS-2010 standard cheques in circulation, said the Reserve Bank of India, in a notification issued on Tuesday.

The deadline for the withdrawal of non-CTS-2010 standard cheques is July 31, 2013 and banks have begun to issue fresh cheques in the CTS-2010 complaint format. But there is still a large volume of non-CTS-2010 format cheques being presented in image-based clearing. Hence, the existing clearing arrangements will continue till December 31, 2013.

New clearing arrangements will be put into effect with effect from January 1, 2014,  in the three CTS centers – Mumbai, Chennai and New Delhi – for clearing of non-CTS 2010 instruments. This separate clearing session will initially operate thrice a week (Monday, Wednesday and Friday), up to April 30, 2014.

Thereafter, the frequency of such separate sessions will be reduced to twice a week up to October 31, 2014 (Monday and Friday) and further to weekly once (Monday). If the day for clearing non-CTS-2010 instruments falls on a holiday, then these cheques will be presented on the previous working day. RBI further told that the operational instructions in this regard will be issued separately by the CTS centers.

CTS – 2010 Cheques

CTS – 2010 Cheques Information

What is Cheque Truncation System (CTS – 2010):  

Simply put, CTS is a process that will give banks the freedom to avoid transporting a physical cheque from the presenting bank (where the cheque is deposited) to the drawee bank (where it is issued). As per the CTS, instead of a physical cheque, an electronic image of the cheque will be sent to the drawee bank. Of course, this image will have all the necessary information needed to process the cheque. Right from the nine-digit MICR code, the date of the cheque and the details of the presenting bank, like branch, etc.

What’s the big deal about it

Faster: Since the cheque will not actually move from one location to another, the time needed to clear the cheque will be lesser. So, if an inter-city cheque takes anywhere from three to seven days (at time more) to get cleared, with CTS it will take a maximum of a couple of days; at times, even it might get cleared the same day.

Curtail Loss: When a cheque has to be moved physically, it can get damaged or worse even get lost in transit. CTS would take care of such issues.

What should you do:

Request: First get in touch with your bank, give them the Non-CTS cheques for cancellation and request the new kind of cheques. That is, CTS 2010 standard cheques.

Ink: Also, keep in mind that going forward, when you write the cheque you should use darker ink so that your signature is captured by the software properly.

Be careful: Also, when you fill the cheque you will need to be extra careful. If you make any alterations in the cheque, your cheque will simply not be cleared; this is to ensure that the risk of fraud is reduced. Which means you will have to use a new cheque leaf if you make a mistake. And the fact that many banks are charging for extra cheques means you might just have to bear the extra cheque costs too.

The RBI plans to have this new system implemented across all banks. So get yourself at least one pen with darker ink.