Cheque Truncation - 18/1/2011

Dear All,

Cheque truncation system (CTS)

Presently the process of clearing of cheques in Banks is carried out by physically carrying the instruments to RBI’s clearing house and forwarding it to the drawee bank. It a long process which takes upto 3 days for local clearing and anywhere between a week to 20 days for outstation cheques (except at par cheques). This process is at times susceptible to cheque losses, frauds, forgery leading to loss of money, reputation and wastage of time and effort. To eliminate this gap, Cheque Truncation System is proposed to be introduced in India.
Truncation is the process of stopping the flow of the physical cheque issued by a person to another person through a bank branch. The physical instrument will be truncated i.e. terminated at some point en-route to the drawee branch and an electronic image of the cheque would be sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc. Thus with the implementation of cheque truncation, the need to move the physical instruments across branches would not be required, except in exceptional circumstances. This would effectively reduce the time required for payment of cheques, the associated cost of transit and delay in processing, etc., thus speeding up the process of collection or realization of the cheques

For further information, refer,

 

http://rbidocs.rbi.org.in/rdocs/content/pdfs/74751.pdf

 

Regards,

 

CA Rahul Joglekar

Partner

Gokhale & Sathe

Chartered Accountants