RBI announced measures for the Continuous Clearing of cheques under the Cheque Truncation System (CTS), which enables cheques to be cleared within hours of submission.
About Cheque Truncation System (CTS):
- Cheque Truncation stops the physical flow of cheques by transforming them into electronic images during the clearing process.
- The system uses images of the cheque and Magnetic Ink Character Recognition (MICR) data, which are captured at the collecting bank and transmitted electronically.
- MICR technology utilizes magnetic ink and special characters to enhance the security and efficiency of cheque processing.
- The National Payments Corporation of India (NPCI) serves as the Cheque Processing Centre (CPC).
- CTS operates with a robust Public Key Infrastructure (PKI)-based security architecture including dual access controls, user IDs, passwords, crypto box, and smart card interfaces.
- Only cheques that comply with CTS-2010 standards, which include minimum-security features like quality paper, watermark, invisible ink bank logo, and standardized field placements, can be processed.
Benefits:
- Cheques can potentially be cleared on the same day they are submitted, minimizing the typical clearing cycle of up to two working days.
- Enhances security, reducing the risks associated with physical cheque movement and fraudulent activities.
- Ensures significant cost savings by eliminating the need for physical transport of cheques.
- Simplifies data storage and retrieval processes with a centralized image archival system.
- Facilitates faster and more efficient cheque processing, reducing delays between presentation and realization times.
Ref: Source
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Frequently Asked Question:
What is CTS truncation system?
The Cheque Truncation System (CTS) is an electronic cheque-clearing system introduced by the Reserve Bank of India that eliminates the need for the physical movement of cheques, which replacing it with scanned images transmitted electronically.
What is the difference between MICR and CTS?
The difference between MICR and CTS is that MICR is a technology used within CTS to read the magnetic ink character recognition data on cheques for verification and processing, while CTS is the broader system that utilizes this data along with cheque images for clearing.