THINK ‘payment’ and the first thing that comes to mind is perhaps a cheque book. As advanced methods like credit cards and netbanking continue to make inroads into the Indian financial system, payment by cheque remains the most preferred option in India.

No wonder then, that the volume of cheque clearing is as high as 6 million every year in India. And the Reserve Bank of India (RBI) faces a tough challenge of making the process more efficient, faster yet safer.

Also read: How long will my cheque take to clear?

Keeping this is mind, the RBI has already completed a pilot for a project called ‘Cheque Truncation System (CTS)’ and seeks to implement it by July 1st, 2010. The Cheque Truncation System has the capability to process the cheque based on its image, doing away with the need for an actual cheque at the time of clearance.

To bring this system into effect, the RBI has prescribed certain benchmarks towards achieving standardization of cheques issued by banks across the. In February 2010, RBI issued a circular known as 'CTS-2010 standard '.

One of the most important points is - ‘Prohibiting alterations / corrections on cheque’ ie no changes / corrections should be carried out on the cheques and this comes into effect from 1st July 2010. That means customer would need to issue a fresh cheque for any change in:
• payee’s name
• amount in figures
• amount in words

Circular also asked banks to make changes in the existing cheque. Here are few changes listed in the circular
1. All cheques shall carry a standardized watermark, with the words “CTS-INDIA” which can be seen when held against any light source.
2. Pantograph with hidden word “COPY” or “VOID” feature shall be included in the cheques so it should be clearly visible in photocopies and unspecified scanned color images.
3. Bank’s logo shall be printed in ultra-violet invisible ink.
4. All cheques should be issued with the account number field pre-printed. This is mandatory for current account holders and corporate customers.
All these changes on the cheque leaf will make it more secure and easy to handle. In the age of technology, the RBI has geared up to ensure to unauthorized copy of cheque gets cleared under Cheque Truncation System.

Ketul H Shah is a Chartered Accountant and an MBA. He has specialized in banking, finance and insurance. He is passionate about consumer rights and actively offers professional advice on consumer-related matters. Ketul maintains a blog on www.askketul.com.

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e-mail: Ketul Shah

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