Reserve Bank of India (RBI) has concluded to extend the Cheque Truncation System (CTS) across all bank branches; presently, CTS is operational at all major clearing houses within the country.
RBI has also mentioned that banks will need to make sure all their branches participate in the image-based CTS within 30 September 2021. This is to ensure CTS availability and render a consistent customer experience irrespective of the bank’s location. This initiative is anticipated to make the settlement of cheques hassle-free and faster.
Under CTS, an electronic image of a cheque is passed on to a paying bank branch via a clearing house, along with required information such as data on the MICR band, presenting bank, date of presentation, among others. With CTS, the cost concerning the movement of physical cheques is eliminated. CTS also brings down the time needed for cheque collection.
The circular stated that banks are free to choose a model of their preference. Banks can either deploy appropriate infrastructure in each of their branches or adopt a hub & spoke model, etc. Concerned banks will have to get in touch with their respective Regional Offices of RBI to operationalise the CTS initiative.
Banks also need to develop a plan to accomplish pan-India coverage of CTS; a status report needs to be submitted to RBI within 30 April 2021.
For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
