When to capture the Cheque Image
The image of the cheque should only be captured after it is encoded. If the image is captured before encoding the cheque amount on the physical cheque and then some validation tool is used to print the cheque amount on the image, there lies an error. The chances are that, due to human error the amount of the cheque and the amount entered by the tool may be different.
Another issue is that, if first the cheque is encoded and then the image is captured, the relationship between the images and the MICR data of the instruments is of utmost importance. This uniqueness must be maintained not only across a bank or an Image processing center but also across different banks and MICR centers. This is because if the MICR data is linked with a different image the entire cheque truncation process will come to a standstill.
The solution to this problem is to convert the Images into the ASCII code and then club it with the MICR data, which is also sent to the clearing house in the ASCII format. On the receiving side these ASCII code can be reconverted back to the image and would thus correspond to the right MICR data.
Truncation Model to be adopted
The Presentation Bank has the option of truncating the cheque at the branch or the service branch or even outsourcing the process. The Bank can thus adopt three models for its Cheque Truncation needs:-
Centralized Image Processing
The Banks having a Core Banking Solution can go in for a centralized cheque processing center where Cheques from various locations can be collected at a central location for imaging. The images can then be sent to the MICR center.
This model has an advantage that all debits and credits to the accounts can be done from a central place, thereby reducing the burden on individual branches.
Decentralized Image Processing
The other option can be to provide the imaging facilities at each branch of the Bank, such that the cheques are truncated and scanned and the MICR data with the image are collectively sent from the individual Branch to the Service Branch.
Another option can be to select some nodal branches in the city which can collect the cheques, truncate and scan them, and then send the collective MICR data and images to service branch.
The Choice of the model, out of these three, will be based on the customer service to be provided, resources in terms of technology readiness, networking facilities and the investment/cost factor.