NEW DELHI: In order to make cheque settlement smoother and faster, the Reserve Bank of India (RBI) has asked banks to implement the image-based Cheque Truncation System (CTS) in all branches by September 30.
“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. To facilitate this, banks shall have to ensure that all their branches participate in image-based CTS under respective grids by September 30, 2021,” RBI said in a statement issued last week.
Under the CTS, instead of physical movement of a cheque issued by a drawer, an electronic image of the cheque is transmitted to the paying branch through a clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, among others. This eliminates the associated cost of movement of physical cheques and reduces the time required for their collection. This will drastically reduce the time taken to settle transactions by cheque.
“They are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub & spoke model, etc. and concerned banks shall coordinate with the respective Regional Offices of RBI to operationalise this,” said RBI.
The central bank has also asked banks to inform the roadmap to achieve pan-India coverage of CTS and submit a status report before April 30, 2021. The CTS is not a new system and is used by some branches since 2010, however, not all branches have been using the system.