ChequeMan Blog

Benefits of CTS for Customers

The benefits of the Cheque Truncation System(CTS) for the customers are:

• Clearance cycle gets shortened : As CTS system is being implemented, the physical or manual movement of cheques for clearance has ceased. With cheques being transmitted electronically, the settlement process becomes quicker, facilitating reduction in the clearance cycle.

• Cheques will not be lost: The fear of loss of cheques during transfer from the collecting bank to the drawee or payee bank is eliminated.

• No geographical restrictions as to jurisdiction: Limitations of the current clearance system with respect to jurisdiction and geography are eliminated.

• Reduction in fraud: CTS helps reduce the scope of fraud significantly. Moreover, the electronic transmission is quick and allows early detection of fraud or any alteration with respect to the payee, amount or the issuer of the cheque. CTS prescribe minimum security features under “CTS-2010 standards” along with superior verification process that further facilitates in the reduction of frauds.

• Enhanced operational efficiency:The operational efficiency of both the bank as well as the customer is enhanced with the introduction of Cheque Truncation System.

Importance of writing Account Payee on the cheques

Cheques on which Account Payee is written cannot be en-cashed by any person. It allows the money to be transferred from one account to another directly. This ensures that the money is transferred to the payee’s account only. If a cheque is Account payee, the payee cannot endorse it in favor of any other person.

Charges on cash withdrawal and deposit using Cheques

In order to decrease the use of cheques, RBI paper has requested the banks to charge their customers for depositing/withdrawing money using cheques. It has also suggested the Government agencies not to charge “convenience charge” for the electronic payment of utility bills.

Other suggestions were to limit the number of free cheques in a year to a very small number, high fee on new cheque books, and mandatory online payment of credit cards issuing post dated cheques.