New RBI Cheque Guidelines- What You Should Know

May 17 , 2013

6 November 2012

Recently RBI notified all banks to achieve standardization and enhancement of security features of cheques in order to migrate to Cheque Truncation System (CTS) 2010 standards by year end. CTS will eventually replace MICR system of cheques in the entire country.

What is CTS?

CTS would bring more efficiency in cheque processing by reducing cheque collection time and cost of physical movement of cheques. Increased security features in CTS-2010 standards cheques will also prevent frauds. It does away with the need of physically moving cheques from the bank branch where it is deposited (presenting branch) to the bank branch that issued it (drawee branch). The presenting branch creates an electronic image of the cheque which after processing by the clearing house is sent to the drawee bank.

In case a customer wishes to see his cheque post issuing it his bank can provide image of the authenticated cheque. Physical cheque can also be made available from the presenting bank, may be at an extra charge. Presenting banks will preserve truncated physical cheques for 10 years.

Which banks come under CTS?

CTS was pilot launched in NCR in 2008 and in Chennai in 2011 for a network of banks. With its success in these 2 grids RBI wants all banks in the country to migrate to CTS standards. Banks have to ensure their cheque leaves are compatible with CTS-2010 standards by December 2012 and to create awareness among customers about the same. Non-CTS-2010 standard cheques have to be withdrawn by end of December 2012. RBI has now extended this to March 2013.

How do I know my cheque book is CTS-10 compliant or not?

CTS-2010 standards mandate uniform placement of important fields for all cheques to enable data capturing by scanners. Account number must be printed on cheques. Banks have been prescribed to have light colours and clutter free background for cheques. Bank's logo will be printed in invisible ultra-violet ink at the top. All cheques would carry CTS watermark, visible when held against light.

In simple terms just check if your cheque leaf has 'please sign here' marked at the bottom right hand side space and an empty pantograph (wavy pettern) embossed at the bottom left hand side. If it does then it is CTS-2010 standard compliant.

How does this affect customers?

There is no change in the clearing process for you as a customer per se. However since a scanned image of the cheque will be used you must ensure that cheques are filled in dark ink and that no overwriting or alteration is done. If there are any changes to be made new cheque leaf should be used. Banks would have to ensure that while stamping the cheque leaves, they do not interfere with the material portions such as date, payee's name, amount and signature. You can proactively request your bank to issue CTS 2010 standard cheque books in case yours is not compliant.

If you have given post dated cheques for EMIs they not be valid after December 2012. You'd have to provide new CTS cheques. Better still you can switch to ECS mode of payment.

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