Effective implementation of cheque truncation system

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The clarification paves the way for bank branches in metros like Mumbai where CTS is still not operational to accept corrected cheques. In addition, drawers could consider using holograms, barcoding or such other features, which would add to the uniqueness of the images.

In case a customer desires to get a paper instrument back, the instrument can be sourced from the presenting bank through the drawee bank. The benchmark prescriptions are collectively known as "CTS standard". Sesi explains that customers should not count the day that a cheque is deposited.

Scanners also function like photo-copiers by reflecting the light passed through a narrow passage on to the document. As explained above, Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole.

Of course such of those customers who are used to receiving the paid instruments like government departments would also receive the cheque images. The scope for frauds inherent in paper instruments is, thus, greatly reduced. The automation of the clearing house was expected to reduce the costs of doing business among the commercial banks and improve efficiency of the national payments system.

As a network e-commerce has been defined as sale or purchase of goods or services conducted over computer mediated networks. A black and white image is also called a binary image. What are the benefits of CTS to customers of banks.

This prohibition is applicable to cheques cleared under the image based Cheque Truncation System CTS only and is effective from December 1, The bandwidth requirement for each bank is calculated based a number of factors like the peak inward and outward volume of the bank, average size of an image, efficiency factor of the network, etc.

Further the new cheque standard "CTS" prescribes certain mandatory and optional security features to be available on cheques which will also add to the uniqueness of the images. These digitally signed images would reach the service branches of the drawee branches clearing house interface.

This is called the presentation clearing. Notably Section 3 of the Bills of Exchange Act defines a cheque to be: Black and White images do not reveal all the subtle features that are there in the cheques.

This suggests that e-commerce means using technological advances to promote everything involving the exchange of business information among computers and humans or traders and customers. The concept of region wise grids will be replaced and operational freedom will be given to the operator in deciding the number of grids required to expand the reach of CTS Pan-India and also on choosing the locations for each grid for optimum use of the resources.

This would effectively reduce the time required for payment of cheques, the associated cost of transit and delay in processing, etc.

It is also possible for cheque issuers to consider newer techniques such as embedded verifiable features such as bar-codes or logos or watermarks, encrypted codes, holograms, etc. The cheque details are captured, typically by the bank presenting the cheque or its clearing agent and electronically presented in an agreed format to the clearing house for onward delivery to the paying bank for payment.

Gray Scale images are mid-way. Over a period of time, banks have added a variety of patterns and design of cheque forms to aid segmentation, branding, identification, etc.

In case the beneficiary or any other connected persons require the instrument, the payee bank could issue a copy of the image, under its authentication, which is called Image Replacement document. Based on the advantages realized by the stakeholders and the experience gained from the roll-out in these centres it has been decided to operationalize CTS across the country.

For getting a gray scale image the pixels are mapped onto a range of gray shades between black and white.

It was also meant to articulate the rights and responsibilities of presenting and paying banks in the Cheque Truncation System. Banks and financial institutions are required to adhere to other prudential and best banking principles in risk management and they are required to implement such technologies that have risk management controls that are appropriate and up to date.

Brief explanation of the entire process flow envisaged in the CTS. At present, the cheque truncation project is being run only in the Delhi area with Chennai expected to move onstream soon.

Moreover there is no fear of loss of instruments in transit. What is Cheque Truncation.

Factors that Affect Banks Acceptance of Electronic Cheque Clearing System: Evidence from Ghana

Also in Tanzania the Law into that effect to mean the Bills of exchange Act45 does not provide on the electronic cheques thus posing a challenge in the issues of e-payment. Cheque frauds can be greatly reduced with introduction of minimum security features prescribed under CTS Standardssuch as embedded verifiable features such as bar-codes, encrypted codes, logos, watermarks, holograms, etc.

With new technologies, it is increasingly common that payment takes place using a transmission medium not under the control of the financial system. CTS: Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a project undertaken by the Reserve Bank of India (RBI) infor faster clearing of cheques.

CTS is based on a cheque truncation or online image-based cheque clearing system where cheque images and magnetic ink character recognition (MICR) data are. CHEQUE TRUNCATION SYSTEM (Updated as on ) 1. What is Cheque Truncation? Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch.

Dec 24,  · As explained above, Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole.

TECHNOLOGIES THE WORLD IS EMBRACINGCheque Truncation System and Automated Clearing HouseFrom the mid s, many countries enacted laws to allow for cheque truncation, in which a physical cheque is converted intoelectronic form for transmission to the paying bank or clearing-house.

The commencement of cheque truncation scheme in the nation’s financial system will raise banks’operational risks, an executive of Sybrin Systems Limited, a soft-ware technology firm based in. Considering this first-point truncation system being the most feasible solution in response to today’s trend of cheque use, institutions are presented with the following questions: What is the best, most effective cheque truncation solution available in the market?

Effective implementation of cheque truncation system
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