Sunday, March 3, 2013

CTS Compliant Bank Cheque - What is it?

What are CTS  Compliant Cheques ? CTS is an acronym for Cheque Truncation System . CTS is a new clearing system proposed by RBI wherein the need for physical movement of cheques between drawer bank and drawee bank will be eliminated. In place of physical cheques , only the image of the cheque having relevant information like MICR code , date of presentation, bank details etc will be sent for clearing. The cheques used for such clearing are called CTS complaint cheques.

What are the advantages of CTS based clearing system ?

 Following are the advantages of CTS based clearing system:
1. Since the need for physical movement of cheques is removed, the whole process of clearing will be faster . One will be able to get credits ion their account faster than is possible today.
2. This will result in lower cost in clearing since banks will save money which is currently spent in physically moving cheques from one place to another during the clearing process.
3. Lower scope of issues arising out of loss of cheques in transit etc.
4. Lower frauds related to cheque clearing  since it is much more safe and secure than physical clearing system currently practised.
5. Superior customer service .

When will it be applicable?

CTS based clearing is proposed to go live from 1st April 2013 and as such CTS compliant cheques alone will be valid from that day onwards.

How to find out if the cheque you have is CTS complaint ?

The new cheque leaves which are CTS compliant will have  following features:-
1. " Please sign above this line" notation will be marked on the right hand bottom side of the cheque.
2. "Payable at par at all branches " will also be written on the cheque at the bottom.

Will alterations on the cheque be accepted post launch of CTS based clearing?

Any kind of ccorrections in payee's name , amount in figures /words etc will NOT be accepted on CTS complaint cheques and as such one needs to be very clear both while writing cheques and also while accepting it.Do not accept any cheque which has over-writing or corrections done on it since banks will not be able to honor such cheques and will be returned back.  Similarly , while issuing cheques , take care to ensure that you write the cheque correctly the first time itself so that there is no need for alterations.

What happens to non CTS complaint cheques /PDCs etc post 31st March 31?

All post dated cheques given for EMI payments  should be replaced by new CTS 2010 compliant cheques . The non complaint cheques given as PDCs etc wont be accepted/valid post 31st March 13.

Thus , its amply clear that non CTS cheques needs to be replaced if you already havent. Apply for new cheques immediately so that there is no last moment rush for you on this account.

Happy Banking !!

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