Electronic Clearing Service (ECS)

Purpose of Cheque Truncation System

The Cheque Truncation System (CTS) was introduced to reduce the time taken to collect cheques and clear them, thereby, improving customer service. The system also reduces the scope of clearing related frauds, reduces reconciliation errors, reduces the cost of collection, and almost eliminates logistics related problems. Even though there are other products on offer, such as, the Real Time Gross Settlement (RTGS) and the National Electronic Fund Transfer (NEFT) to make payments, many people prefer using cheques, keeping this in mind, the Reserve Bank of India (RBI) decided to increase the efficiency of the cheque clearing system. The CTS is a more secure system than the exchange of physical documents which requires the document to move from one point to another, 'causing an increase in the processing time of cheques and there is a risk of the documents getting misplaced during transit, mutilated during transit or manipulated during transit.

Process of Cheque Truncation

As the CTS is an image-based truncation system the process for clearing a cheque under CTS is different to clearing a non-CTS 2010 cheque. The step-by-step process of clearing a CTS 2010 cheque has been listed below:

• The presenting bank captures images and data pertaining to the cheque on a capturing system.
• The presenting bank will then transmit the captured data duly signed and encrypted to the clearing housing for further transmission to the paying bank. For the purpose of providing a secure line of communication the presenting bank and the paying bank are provided with an interface called the Clearing House Interface (CHI), this interface allows both banks to transmit data to the Clearing House in a secure manner.
• To arrive at a settlement figure the Clearing House processes the data it has received and routes the data and images to the paying bank. This process is Presentation Clearing. Through the CHI the paying bank receives the data from the Clearing House to initiate the processing of the payment. The paying bank's CHI also generates the return file for unpaid instruments.

CTS 2010 Cheques

The CTS can process all types of cheques presented, but to achieve standardisation of cheques issued and to eliminate cheque frauds a set of norms called the CTS 2010 was introduced. These norms include various security measures on cheques, such as, the quality of the paper used, a watermark, the bank's logo in invisible ink, a void pantograph etc. and a standardisation of field placements on the cheques. The various new features present on a CTS 2010 cheque are:

1. Boxes present to include date in dd/mm/yyyy format.
2. IFSC  code and bank address is printed on the top of the cheque.
3. Name of the printer with CTS-2010 is printed on the left side of the cheque.
4. A pantograph showing VOID/COPY while photocopying a cheque under the account number.
5. The bilingual format has been replaced with the rupee symbol.
6. Field for signature provided at the bottom right.
7. The CTS INDIA watermark is visible under light.
8. An ultra violet logo of the bank is printed on the upper left side only visible under UV light.