ChequeTruncation System (CTS)
1.Introduction
RBI is considering replacement of the existing system of settlement ofpayment on the basis of physical cheques by a new procedure called “Cheque Truncation System” (CTS). It is an online image-based chequeclearing system where cheque images and Magnetic Ink CharacterRecognition (MICR) data are captured at the collecting bankbranch and transmitted electronically eliminating the actual chequemovement.
2. Security.
CTS is protected by a comprehensive PKI-based security architecturewhich incorporates basic security and authentication controls such asdual access control, user ID and passwords with cryptobox and smartcard interfaces.
3. Benefits.
Realisation of proceeds of cheque possible within the same day.
Data storage and retrieval becomes easy.
Minimizes risks and introduce a secured cheque clearing system.
Will result in cost savings due to lower cost in physical movement ofcheques.
Minimizing bottlenecks and delays between presentation and realizationtime.
Provides shorter clearing cycles and a centralized image archivalsystem.
4. Impact onGovernment Departments.
Integration of CTS with the existing system very easy.
No change in the existing method of issue of cheques.
No expenditure required to be made by Government Departments.
Department will continue to get paid scrolls.
Linking and pairing of cheques with Schedule-III will be done on thebasis of online cheques images.
If required, an image replacement document can be printed by Departmentit*elf.
Government Departments may have to re-engineer their Codes and Manualsgoverning settlement of their cheques through legally valid electronicimages instead of physical cheques.
Modalities for post payment reconciliation need to be worked out.
5.Implementation.
CTS is Initially to be taken up as a Pilot Project in NCR beforeextending to the rest of the country.
National informatics Centre (NIC) would develop software inconsultation with RBI and CGA by September 2006.
NIC would study and suggest mode of transmission of data from banks andensure security system for tamper free data transfer.
NIC would provide a uniform procedure for adoption by GovernmentDepartments for archiving the cheque images.
