Cheque Truncation System Product Overview

Benefits

Customer Service

Extended cut-off time for acceptance of Customer Cheques by banks.
Easy retrieval of information.
Reduced timelines for clearing.

Operational Benefit

MICR amount encoding is not required.
Reconciliation difference eliminated - MICR and Image data travel together.
No cheques being lost/tampered/pilfered.
No risk of any manipulation of data and images during transit.
CTS 2010 standards leading to enhanced security and automation.

Commercial Benefit

Cost involved in paper movement eliminated.
Grid implementation allowing better liquidity management for banks.

Fraud Prevention Mechanism Provided

Manipulation of data and image during transit is prevented by digital signature/encryption.
CTS 2010 standards lead to enhanced security (Pl refer to attached NPCI circular for CTS 2010 standard) MICR reject repair flag.

Decrease in Time Scales

Prior to CTS clearing, instruments used to get settled in MICR clearing. There were total 66 MICR centers across India. These MICR centers used to undertake clearing & settlement in their local geography. The intra-MICR clearing was considered outstation clearing. During MICR clearing physical instruments were travelling for clearing to the respective MICR center. The typical flow for clearing is explained in next paragraph.

The customer deposits an instrument in a dropbox/collection point/bank branch. All instruments received before a cut-off time are collected & physically transported to the service branch of the presenting bank. The instruments would get sorted as per MICR clearing centers & would physically travel to the corresponding MICR clearing centre, i.e. Local or outstation clearing. At MICR centers, respective banks would present and collect their instruments. These would be taken through the same route to the respective bank branch for processing. The rejected instruments would traverse the same route back to the presenting bank branch. The return cycle of rejected instruments would be completed the next day & settlement is completed on completion of the return cycle. The customer would get funds on completion of the settlement process.

In the CTS scenario, the physical instrument is truncated at the presenting bank end (either at the branch level or service branch level). The images & data of collected instruments captured at the presenting bank would travel electronically to drawee Bank for processing on the same day. The return cycle would be completed the next day. The return cycle would be completed the next day & settlement is completed on completion of the return cycle. The customer would get funds on completion of the settlement process. Further, all clearing locations are divided into 3 regional grids. All Clearing locations of a grid are settled together on a T+1 basis.

The typical timelines are as follows:

CTS clearing in a Grid	MICR Clearing	Remarks
Settlement on T+1 Basis i.e. customer can get funds on Next working day, subject to bank policies.	Local Bank-Branch
	Settlement on T+2 Basis i.e. customer get funds after 2 working days.	CTS Benefit of approx. 1 day
	Other MICR Location (outstation) - Own Bank-Branch presence
	Typically Settlement on T+4 Basis i.e. customer can get funds on 4th working day (including travel and presenting time at outstation location)	CTS Benefit of approx. 3 days
	Other MICR Location (outstation) - Bank-Branch presence through
	Typically Settlement on T+7 Basis i.e. customer can get funds on 7th working day, (including travel and presenting time at outstation location and fund transfer from correspondence bank).	CTS Benefit of approx. 6 days
	Other MICR Location (outstation) - Bank-Branch No tie-up
	Typically Settlement on T+10 Basis i.e. customer can get funds on 7th working day, (including travel and presenting time at outstation location and DD travel & encashment at originating location).	CTS Benefit of approx. 9 days,

Do's

Ensure to use only CTS-2010 standard cheques. CTS-2010 shall be printed on the left side of the cheque.
Write clearly and legibly and always use permanent ink pens such as a ball pen.
Write all the details (beneficiary name, date, amount in words and figures) on the cheque using the same pen, at once and do it all yourself. It not only helps you to avoid mistakes but also prevents any misuse.
Begin writing the amount in words close to the word “Rupees” without leaving too much space in between the words written & end with the word “only”. The amount in figures must be written close to the “?” box and put “/-” after the amount in numbers and strike through unused space in the name and amount fields to avoid any further additions.
Sign clearly and only in the space provided.
Alteration is permitted only in the date field. Affix countersign against the altered date.
Make sure that no cheque is removed from the cheque book without your knowledge and ensure that spoiled cheques are completely destroyed.
Ensure that cheques are kept in a safe and locked place, and never leave cheques, whether signed or unsigned, unattended.
Report immediately to your bank if there are cheques missing from your chequebook or discrepancies in your bank statement, and even request that payment be stopped for the lost cheque and chequebook.
Ensure your account has sufficient funds before you issue a cheque.
For a cancelled cheque, write “cancelled” clearly across the cheque to make it unusable.

Don't

Write below the MICR (Magnetic Ink Character Recognition) field of the cheque to allow smooth clearing of your cheque. The MICR field is usually a 5/8 inch band at the bottom of the cheque.
Sign any blank cheque or give any blank cheque as payment.
Use erasable pen or pencil, which can be easily erased and written over, to write details on a cheque.
Fold, pin or staple written cheques. If the cheque is folded, the clarity of the wordings, which fall across the “folded” lines, may be affected.
Alter/amend/erase content on the face of the cheque.