Apex Bank Wants Image-based Cheque Truncation System Expanded In All Bank Branches by Sept 30

 

The RBI has asked banks to implement image-based Cheque Truncation System in all branches by September 30

In Feb, the Reserve Bank of India (RBI) announced pan-India coverage of CTS by bringing all bank branches under the image-based clearing mechanism. The CTS is in use since 2010 and presently covers around 1,50,000 branches.

The Reserve Bank on Monday asked banks to implement the image-based Cheque Truncation System (CTS) in all branches by September 30.

This is aimed at faster settlement of cheques resulting in better customer service. As of now, 18,000 bank branches are still outside any formal clearing arrangement.

In February, the Reserve Bank of India (RBI) announced pan-India coverage of CTS by bringing all bank branches under the image-based clearing mechanism.

The CTS has been in use since 2010 and presently covers around 1,50,000 branches. All the erstwhile 1,219 non-CTS clearing houses (ECCS centres) have been migrated to CTS effective September 2020.

However, there are thousands of branches outside any formal clearing arrangement and customers face hardships due to longer time taken and cost involved in collection of cheques presented by them, the RBI said.

“To leverage the availability of CTS and provide uniform customer experience irrespective of location of her/his bank branch, it has been decided to extend CTS across all bank branches in the country,” the RBI circular said.

Now banks have to ensure that all their branches participate in image-based CTS under respective grids by September 30, 2021, it said.

Banks are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub and spoke model and concerned banks should coordinate with the respective Regional Offices of RBI to operationalise this, it said.

Benefits of Cheque Truncation System

Cheque Truncation System (CTS) targets quicker cheque clearance and is discontinuing the flow of the physical cheque in its way of clearing.

Instead, an electronic image of the cheque is transferred with vital essential data adding elegance and speed to cheque processing saving time and cost and expanding efficiency in human resource rationalization, business process re-engineering and enhanced customer service.

 

CTS signals a great move towards Digital India. IMPS, RTGS and NEFT were game-changers for the banking sector. The implementation of grid-based Cheque Truncation System cheque clearing process has added speed and operational efficiency in addition to other benefits such as business process re-engineering, cost-effectiveness, better service and adoption of cutting-edge technology.

• ·       Clearing related frauds less plausible

·       Probability of cheques misplaced in transit is eliminated
·       CTS is advanced and secure.
·       It provides quicker clearance of cheques
·       Reduces operational risk related to paper clearing