by

Rajesh Goyal

What is Cheque Truncation System or CTS 2010 :

The full form of CTS is Cheque Truncation System.  RBI has decided to launch this system and all banks across India are required to follow RBI guidelines in this regard.  As per RBI guidelines, now all banks have to issue cheques conforming to the CTS 2010 standards with uniform features.

How is CTS 2010 will be different from earlier system of cheque clearance?

Under the CTS system, the physical movement of cheques between banks will be elminated.  At present , when you issue a cheque to someone,  he has deposit the cheque in his bank to get credit.  Then  this cheque moves physcially  from his bank to your bank which involves a lot of time and risk.     Now under CTS, instead of physical movement of the cheque, an electronic image of the cheque will be transmitted to the drawee branch / bank.    The presenting bank will  retains the physical cheque.    Along with the electronic image, certain key relevant information is also transmitted, such as date of presentation, presenting bank details, data on the MICR band.

What is the purpose of CTS 2010  or What are the benefits of CTS?

The new process is being adopted to reduce the scope of frauds as the new standardized cheques will have number of security features.   The system will also help in speed clearance of chequess and thus customers will be able to get faster credit to their accounts.   This will happen as there will be no physical movement of the cheuqes and hence time is saved and risk of loss of cheques in transit are totally eliminated. 

When will the CTS begin ? :

RBI has originally decided that CTS will be effective from 1st January 2013, but then it was announced that it will be effective from 1st April, 2013.   However, as per RBI guidelines dated 18th March, 2013, now this deadlines has been revised and it will be effective from 1st August, 2013 (i.e. non CTS cheques will be valid till 31st July, 2013).

"RBI will review the deadline in June 2013. “Cheque issuing banks shall make all efforts to withdraw the non-CTS-2010 Standard cheques in circulation before the extended timeline of 31 July 2013 by creating awareness among customers through SMS alerts, letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site etc,” RBI said.

What are the features of cheques issued under CTS ? :

(a) Cheque printer details: This is printed on the extreme left hand side of the cheque.  The printer details along with the words ‘CTS-2010’ is mentioned along the area where you tear off the leaf from the cheque book.

(b) Rupee symbol: The new symbol of the Indian rupee is printed beside the area where the amount in figures needs to be written.

(c) Details of the bank and its logo: The bank details and its logo are printed on the face of the cheque. However, it is printed in invisible ink.

(d) Signature space indicator: The words ‘please sign above’ are mentioned indicating the space where you will need to sign the cheque.

(e) VOID pantograph: This is a wavelike design, which is visible to the naked eye and seen below the area where the account number is printed.

The above set of minimum security features would ensure uniformity across all cheque forms issued by banks in the country  which in turn will help presenting banks while scrutinising / recognising cheques of drawee banks in an image-based processing scenario. The homogeneity in security features is expected to act as a deterrent against cheque frauds, while the standardisation of field placements on cheque forms would enable straight-through-processing by use of optical / image character recognition technology.

The benchmark prescriptions are collectively known as "CTS-2010 standard".  Indian Banks Association (IBA) and National Payments Corporation of India (NPCI) are co-ordinating with the banks on implementation of the new standard. Accordingly, the cheques issued are tested and certified by NPCI and only after such cerification the cheques would be issued to the customers.

What Should Cheque Book Holders Should Do :

(a) You should  ensure that you use only CTS-2010 compliant cheque leaves from April 1, 2013.

(b) You can check if you hold a CTS compliant cheque book by verifying if the cheque leaves have the features mentioned above. You need to apply in your bank for the same and it is available free of cost.

(c) If you have any unused cheque leaves with you, these must be surrendered in your bank.

(d) In case you have given old post dated cheques (like for your Housing Loan or Auto Loan) to some body, you must exchange them with the CTS-compliant cheques immediately.

RBI has advised that though non CTS-2010 standard cheques will continue to be accepted post July 31,  2013, they will be cleared at less frequent intervals and may incur additional charges.  RBI has advised to preferably use dark coloured ink while writing CTS cheques.