Cheque Truncation System (CTS) Requirements in 2021

New Cheque Truncation System (CTS) Requirements in the Indian Banking Sector:

On September 30, 2021, the Reserve Bank of India (RBI) ordered all banks to implement the Check Truncation System (CTS) at all their branches across the country. It must be effective for cleaning paper and paper. speeds up the audit process in the country.

 The Check Truncation System (CTS) is the process whereby an electronic image of the check, rather than a check drawn from a drawer, is physically sent from a clearing center, along with relevant information such as submission date, bank, and Details. in the MICR band. This speeds up the entire check cleaning process and also eliminates the cost of physically moving the checks.

 The Check Trunking System (CTS) has been in use since 2010 and currently covers around 1,500 branches. The 1,219 former non-CTS clearing houses (ECCS centers) have migrated to CTS since September 2020.

 However, Shaktikanta Das, chairman of the Reserve Bank of India (RBI), said at the first monetary policy meeting after the Union budget in 2021 that there are branches of several banks that do not have formal agreements and that their clients are residents. . much of the discomfort. and the adversity of longer cleaning times and expenses associated with paying the checks they offer.

 To further improve the process by speeding up payment and settlement systems, the RBI proposed in March to bring all 18,000 branches that are still outside the central cleaning system to the CTS. On behalf of the RBI to the banks, they must ensure by September 30, 2021, that all their branches participate in the CTS based on the images in their respective grids.

 The bank circular also states that they can use any model of their choice, such as building a suitable branch infrastructure or following a hub and phantom model, etc., and that interested banks should partner with their local RBI offices to ensure. Banks must chart a roadmap for achieving pan-Indian CTS coverage and submit a status report to the RBI by April 30th.

 Despite many efficient products and services, such as RTGS (Real Time Gross Settlement) and NEFT (National Electronic Funds Transfer), which facilitate payments between banks and customers online and in near real-time, checks are still an important form of the ground because RBI focuses on improving the efficiency of the cleaning cycle.

Some of the important benefits of CTS are:

1. If all bank branches in the country are under CTS, the customer will be more comfortable and the card cleaning system will be more efficient.

2. CTS offers numerous benefits, such as rationalization of human resources, recycling of business processes, savings, use of the latest technologies for banks and customers.

With no physical check movements, CTS reduces the cost, time, and labor required during the physical check collection process. Customers also benefit from the long-term acceptance of customers at the bank.

4. There are no logistical problems and the possibility of losing checks is eliminated, which reduces the risks of the operation and the risks associated with issuing the card.

5. CTS merged several cleaning rooms from different banks with different levels of service into a standard clearing system with uniform processes and practices across the country. This reduces investment in MICR machines and the associated AMC costs and therefore operating costs. It also eliminated approval gaps and interoperability issues so customers could benefit from faster, better, and more integrated services at lower costs.

6. There is no risk that the digital signature/encryption will affect data and images.

7. CTS checks contain various security features such as watermarks and bank inks printed with special ink, visible only on UV scanners. These security features ensure consistency across all checks and also help reduce fraud.

Although RTGS, NEFT, and IMPS have revolutionized the banking sector in urban areas, checks are still one of the main means of payment for rural and urban areas in India. Therefore, the RBI CBI process, which includes all branches of all banks in the country, is a big step towards digital India and will change the banking sector in particular.

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