ChequeMan Blog

Smart and Easy Cheque Printing Software

Tag Archives: cheque truncation System

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

Reserve Bank of India to do away with need to return paid government cheques to depts

Easing norms to enhance efficiency of cheque clearing system, the Reserve Bank will do away with the requirement of returning back paid government cheques to the concerned departments.

Presently Cheque Truncation System (CTS) is used to clear cheques that facilitates presentation and payment of cheques without their physical movement.

However, with regard to government cheques, they need to be sent back in physical form after the payment has been made to the government departments.

“The matter relating to dispensation of this requirement was taken up with the government and…the Controller General of Accounts, Ministry of Finance has given approval to our proposal of doing away with the requirement of returning paid government cheques back to government departments concerned,” RBI said in notification.

The revised guidelines would be effective from October 1, 2014, RBI said.

Accordingly, RBI said the government cheques would be paid in CTS clearing based on their electronic images. If any drawee bank wants to verify government cheque in physical form before passing it for payment, the image would be returned unpaid under the reason ‘present with documents’.

“The presenting bank shall ensure that the instrument is presented again in the next applicable clearing session without any reference to the account holder,” RBI said.

Among others, RBI said both the presenting and draweee banks need to preserve the cheques for a period of 10 years.

“In case some specific cheques are required for the purpose of any investigation, enquiry, etc., under the law, they may be preserved beyond 10 years.”

Also, government cheques paid by a drawee bank across its counter by cash withdrawal or transfer also needs truncation and preserved for 10 years and the drawee bank should continue to send the payment scrolls, monthly DMS, to government department.

“They should ensure that the mistakes/discrepancies pointed out are rectified as per procedure, missing images of paid cheques are submitted immediately, the copies of the scrolls duly verified by the PAO are kept on its record.”

Further, it said government may require any paid cheque in physical form for reconciliation, enquiry, investigation, and they can approach the drawee bank.

Source: The Economic timesÂ