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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.

No EMI cheques if ECS is available

Banks have been directed by the Reserve Bank of India to not accept any fresh post-dated equated monthly instalment (EMI) cheques at locations where the facility of electronic clearing service/Regional Electronic Clearing Service is available.

The central bank has also advised banks to convert existing cheques in such locations into ECS/RECS (Debit) by obtaining fresh mandates.

Cheques complying with the CTS-2010 standard formats alone should be collected, at locations where the facility of ECS/RECS is not available.

The new ‘CTS 2010’ standard cheque has been introduced on account of several developments in cheque clearing — growing use of multi-city and payable-at-par cheques at any branch of a bank, popularity of speed-clearing for local processing of outstation cheques and implementation of grid-based cheque truncation system for image-based cheque processing.

ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. Essentially, ECS enables bulk transfer of money from one bank account to several other bank accounts, or vice-versa.

Under ECS (debit), an account-holder with a bank branch can authorise an ECS user to recover an amount at a prescribed frequency by raising a debit to his / her bank account.

Regional ECS currently operates at nine centres / locations across the country.

RECS facilitates the inclusion of all core-banking-enabled branches in a State, or group of States, and can be used by institutions to reach beneficiaries easliy.