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Entire process flow envisaged in the Cheque Truncating System (CTS)

The CTS project envisages a safe, secured, faster and effective system for clearing of the cheques. In the CTS the presenting bank will capture the data & images of the cheques using their Capture System which is internal to them. They have to meet the specifications and standards prescribed for data and images. To ensure security, safety and non-repudiation the PKI (Public Key Infrastructure) is being implemented across the system. The banks will send the captured images and data to the central clearing house for onward transmission to the payee/drawee banks. For that purpose RBI will be providing the banks software called the Clearing House Interface (CHI) that will enable them to connect and transmit data in a secure way and with non-repudiation to the Clearing House (CH). The Clearing House will process the data and arrive at the settlement figure for the banks and send the required data to payee/drawee banks for processing at their end. The drawee/payee banks will use the same CHI mentioned earlier for receiving the data and images from the Clearing House. It will be the responsibility of the drawee bank Capture System to process the inward data and images and generate the return file for unpaid instruments.

Banks in Thanjavur to adopt CTS 2010

Banking in Thanjavur is poised to evolve further with the migration from manual clearing of instruments to the CTS 2010 format from Monday. However, the traders are apprehensive of some teething troubles. The new system has come a tad late to Thanjavur.

The ordinary cheques will make way for CTS 2010 formatted cheques. In Thanjavur, the State Bank of India (SBI) Main Branch has been acting as the clearing house thus far. The Reserve Bank of India had directed the migration that involves digital screening of the banking instruments such as cheques and demand drafts to facilitate efficient management of clearing operations, maintaining clearing timings, effective follow up, and most importantly prevention of malpractice, according to SBI Assistant General Manager Arunachalam Ganesan.

For smooth changeover, all banks and account-holders had been given intimation. The greatest advantage of the CTS was that there was no need for physical movement of financial instruments as they would primarily be transmitted in digitalised fashion, Mr. Ganesan told The Hindu . Also banks could accept instruments for the day’s clearing up to 4 p.m.

Welcoming the migration, some customers here fear teething trouble in implementing the programme. Some bank branches were not having the required infrastructure to host the programme and their clients would suffer for the time being. Another issue was that any marginal error such as a longer stroke in a signature while issuing instruments could land people in trouble as they might be rejected, said S. Prakash, an entrepreneur in Thanjavur. However, more inquisitive customers such as the former president of the District Chamber of Commerce and Industry K. Padmanabhan hopes that manual intervention in cases of marginal errors could cushion the problem. Thanjavur region is entering the CTS format rather late as only Gudalur region is said to be among the last centres not to enter the system so far. Many areas had migrated to CTS at least five years ago.

The transaction of financial instruments will be in digital format.

Banks will be able to accept cheques and drafts till 4 p.m. for day’s clearing.

Source: The Hindu

State to adopt cheque truncation system from Feb 15

JAIPUR: To expedite the payment process for contractors and other cheque transactions, the state government will switch to ‘Cheque Truncation System’ from February 15. Under CTS, presentation and payment of cheques are based on their electronic images thus doing away with the flow of the physical cheques issued by a drawer to the drawee branch.

Following the guidelines of Reserve Bank of India (RBI), state government has decided to adopt the system from mid-February. CTS will enhance efficiency of cheque clearance and make transaction process more transparent. In place of physical cheques an electronic image of the cheque will now be transmitted to the drawee branch through clearing house.

The process would obviate the need to move the physical cheques across branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing.

CTS will also effectively eliminate the associated cost of movement of the physical cheques, reduces the time required for their collection and bring elegance to the entire activity.

“Most processes of transferring money in the government is already being done online but there are many departments where payments to contractors and agencies take place through cheques. This will now be replaced by CTS,” said an official from the finance department. Departments that are likely to be benefited the most from the process are PWD, PHED, irrigation and forest department.

Meanwhile, as per the RBI directions all state governments have to switch to CTS pushing the discontinuation of MICR-based cheque system.

Source: The Times of India