Cheque Truncation System (CTS)

1. Introduction

RBI is considering replacement of the existing system of settlement of payment on the basis of physical cheques by a new procedure called “ Cheque Truncation System” (CTS). It is an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting  bank branch and transmitted electronically eliminating the actual cheque movement.  

2. Security.

CTS is protected by a comprehensive PKI-based security architecture which incorporates basic security and authentication controls such as dual access control, user ID and passwords with cryptobox and smart card interfaces.
3. Benefits.

Realisation of proceeds of cheque possible within the same day.
Data storage and retrieval becomes easy.
Minimizes risks and introduce a secured cheque clearing system.
Will result in cost savings due to lower cost in physical movement of cheques.
Minimizing bottlenecks and delays between presentation and realization time.
Provides shorter clearing cycles and a centralized image archival system.

4. Impact on Government Departments.

Integration of CTS with the existing system very easy.
No change in the existing method of issue of cheques.
No expenditure required to be made by Government Departments.
Department will continue to get paid scrolls.
Linking and pairing of cheques with Schedule-III will be done on the basis of  online cheques images.
If required, an image replacement document can be printed by Department itself.
Government Departments may have to re-engineer their Codes and Manuals governing settlement of their cheques through legally valid electronic images instead of physical cheques.
Modalities for post payment reconciliation need to be worked out.

5. Implementation.

CTS is Initially to be taken up as a Pilot Project in NCR before extending to the rest of the country.
National informatics Centre (NIC) would develop software in consultation with RBI and CGA by September 2006.
NIC would study and suggest mode of transmission of data from banks and ensure security system for tamper free data transfer.
NIC would provide a uniform procedure for adoption by Government Departments for archiving the cheque images.

© Copyright 2006 CGDA