Banks to introduce new CTS-2010 by December 31, 2012
Banks all over India are in the process of issuing fresh-look cheques with more security and standardized features to all its customers by December 31, 2012.
From January 1, 2013, cheques which do not conform to CTS-2010 standards would not be entertained by banks.
What is Cheque Truncation?
- We go to a bank and sign a Cheque … now, “Truncation” is the process of stopping the need for movement of the physical cheque (paper cheque leaves) from one bank’s branch to other bank’s branch.
- In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.
What is Cheque Standardization and what does CTS 2010 Standard mean ? What are the benefits of adopting CTS-2010 ? How would be the uniqueness of a physical cheque be captured and imparted to the cheque image ? How are the images of cheques taken ? What are the modes in which banks can participate in CTS ?
What is Cheque Standardization and what does CTS 2010 Standard mean ?
- Growing use of multi-city and payable-at-par cheques for handling of cheques at any branches of a bank, introduction of Cheque Truncation System (CTS).
- CTS-2012 is a set of benchmarks towards achieving standardization of cheques issued by banks all over India.
- The benchmark prescriptions are collectively known as "CTS-2010 standard".
- These include provision of mandatory minimum security features on cheque forms such as quality of paper, watermark, bank’s logo in invisible ink, void pantograph and standardization of field placements on cheques.
- Indian Banks Association (IBA) and National Payments Corporation of India (NPCI) are co-ordinating with the banks on implementation of the new standard.
- The benchmark prescriptions known as ‘CTS-2010 standard’ are to be implemented by December 31, 2012.
Benefits of adopting CTS-2010
- The security features in cheque forms will assist the presenting banks to identify the genuineness of the drawee banks’ instruments while handling them in the image-based scenario.
- The homogeneity in security features will act as deterrent against frauds.
- The fixed field placement specifications will facilitate straight-through-processing at drawee banks’ end through the use of optical/image character recognition technology.
What are the benefits of CTS to customers of banks?
- Speeds up the process of settlement.
- No fear of loss of instruments in transit.
- Further, limitations of the existing clearing system in terms of geography or jurisdiction can be removed.
- Use of images obviates the need to handle and move physical cheques at different points. The scope for frauds inherent in paper instruments is, thus, greatly reduced.
- If required, an image replacement document can be printed by a Government Department itself.
The benefits from CTS could be summarized as follows –
Shorter clearing cycle
Superior verification and reconciliation process
No geographical restrictions as to jurisdiction
Operational efficiency for banks and customers alike
Reduction in operational risk and risks associated with paper clearing
How would be the uniqueness of a physical cheque be captured and imparted to the cheque image ?
- To ensure only images of requisite quality move in the CTS processing cycle, there is a rigorous quality check process at the level of the Capture Systems and the Clearing House Interface (of the presenting bank). The solution encompasses Image Quality Assessment (IQA) at different levels.
- Further, the new cheque standard "CTS-2010" prescribes certain mandatory and optional security features to be available on cheques, which will also add to the uniqueness of the images.
How are the images of cheques taken ?
- Images of cheques are taken using scanners.
How the image and data transmitted over the network is secured ?
- CTS is protected via a comprehensive Public Key Infrastructure (PKI).
- CTS is compliant to the requirements of the IT Act, 2000.
What are the modes in which banks can participate in CTS ?
There are two modes in which banks may participate in CTS –
Direct membership: Banks may participate as direct member provided they have a settlement account with the settlement bank and have put in place necessary infrastructure for participating in CTS.
Indirect / Sub-membership: Banks may become sub-members / indirect members of the direct members by using the infrastructure and / or settlement services of the direct members. The settlement for such indirect / sub-member could be done either directly (if such banks have settlement accounts with the settlement bank) or through the direct member through whom they are participating.