ChequeMan Blog

Technology Behind Cheque Truncation Process

The technology used in cheque clearing process or technology behind the new cheque truncation process is as follows:-

1. Cheques are kept in the presentation bank and are never sent to the Clearing House or to the drawer’s bank. The information on the cheque is encoded or read using MICR and then image processing technologies are used to convert cheque images to digital form.
2. The image of the cheque is captured as it goes through the reader/sorter machine. This can be done by using either digital cameras to capture the digitized form of the front and back of the cheque or another alternative is by using a two-way digital scanner.
3. The image is captured in the JPEG or GIF extension and can be preserved as images on a microfilm, an arrangement that permits signature verification should the need arise.
4. During image compression the images should be of at least 100 dpi resolution so that the quality of the image is maintained.
5. All cheques are stamped with serial numbers for use in potential inquiries. These should match with the number of the image.
6. As most banks are gearing towards networked branches, Broadband and VPN could be the model adopted for providing connectivity. Dial-up or Leased Line can be used for transmission of MICR Codeline and images to the member banks via the Clearing House.
7. JAVA based API can facilitate internal/external interactions with the archive. Browser based interface with which the customer can receive the cheque image  statements via e-mail to see when the cheque was written, to whom it was made out and when was it cleared, will be extremely beneficial in the long run.
8. The Technology should allow Drawee Bank/branches to view the front and reverse of cheque images of individual instruments in a number of ways (flipped, rotated, turned or enlarged a particular field/section) using any standard browser interface.

Validity of Non – CTS Cheques extended

As per the Revised Guidelines of RBI the validity of Non-CTS compliant cheques have been extended till 31st  July 2013. Earlier it was extended till 31st March 2013. RBI has issued a note no. 1622 dated 18 March 2013 regarding extension of last date of CTS-2010 cheque book.

RBI/2012-13/444
DPSS.CO.CHD.No. 1622/04.07.05/2012-13

March 18, 2013

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks/Local Area Banks

# Standardization and Enhancement of Security Features in Cheque Forms/Migrating to CTS 2010 standards

Madam / Dear Sir

A reference is invited to our circular DPSS.CO.CHD.No. 955/04.07.05/2012-13 dated December 14, 2012. On a review of the progress made by banks so far in migration to CTS-2010 standard cheques and in consultation with a few banks and Indian Banks Association, it has been decided to put in place the following arrangements for clearing of residual non-CTS-2010 standard cheques beyond the cutoff date of March 31, 2013.

1. All cheques issued by banks (including DDs / POs issued by banks) with effect from the date of this circular shall necessarily conform to CTS-2010 standard.
2. Banks shall not charge their savings bank account customers for issuance of CTS-2010 standard cheques when they are issued for the first time. However, banks may continue to follow their existing policy regarding cheque book issuance for additional issuance of cheques, in adherence to their accepted Fair Practices Code.
3. All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing houses [including the Cheque Truncation System (CTS) centers] for another four months up to July 31, 2013, subject to a review in June 2013.
4. Cheque issuing banks shall make all efforts to withdraw the non-CTS-2010 Standard cheques in circulation before the extended timeline of July 31, 2013 by creating awareness among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site etc.
5. A progress report in this regard to be submitted to this department in the format prescribed in the annex, enabling monitoring of the progress made by banks in respect of migration to CTS-2010 standard cheques.
6. In addition, the bank-wise volume of inward clearing instruments processed in the Cheque Processing Centers will be monitored with respect to the CTS-2010 / non-CTS-2010 standard cheques presented on them.
7. No fresh Post Dated Cheques (PDC)/Equated Monthly Installment (EMI) cheques (either in old format or new CTS-2010 format) shall be accepted by lending banks in locations where the facility of ECS/RECS (Debit) is available. Lending banks shall make all efforts to convert existing PDCs in such locations into ECS/RECS (Debit) by obtaining fresh mandates from the borrowers.

The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).

Please acknowledge receipt and confirm compliance.

Yours faithfully,
(Vijay Chugh)
Chief General Manager

What does CTS – 2010 Standard mean

‘Cheque Truncation System (CTS) – 2010 Standard’ is a set of benchmarks set to achieve standardisation of cheques issued by banks across the country. It includes some of the mandatory security features on cheques such as quality of paper, watermark, bank’s logo in invisible ink, void pantograph and standardisation of field placements on cheques.