As announced in the Statement on Developmental and Regulatory Policies dated February 5, 2021, RBI today announced that all banks shall have to ensure that all their branches participate in image-based CTS under respective grids by September 30, 2021. “To leverage the availability of CTS and provide uniform customer experience irrespective of the location of her/his bank branch, it has been decided to extend CTS across all bank branches in the country. To facilitate this, banks shall have to ensure that all their branches participate in image-based CTS under respective grids by September 30, 2021”, RBI said. The Central Bank further said that the banks are free to adopt a model of their choice, like deploying suitable infrastructure in every branch or following a hub & spoke model, etc. and concerned banks shall coordinate with the respective Regional Offices of RBI to operationalize this.
The Cheque Truncation System (CTS) is in use since 2010. The CTS system is basically an online Image-based Clearing System (ICS). In this system of clearing, the collecting bank need not present the physical cheque to the drawee branch. The presenting bank captures the cheque images and Magnetic Ink Character Recognition (MICR) data from end-to-end precise scanners by using the Capture System. Further, it removes the geographical limitations of the earlier clearing system as the bank branches falling within the grid jurisdiction are treated as local clearing. Thus the outstation cheques within the grid are cleared as local cheques which effectively eliminate outstation cheque collection charges as well as saves time. It has also easy the complexities in interbank clearing reconciliation associated with the exchange of physical cheques.
At present 150000 branches including all the erstwhile 1219 non-CTS clearing houses (ECCS centres) which have been migrated to CTS effective September 2020. However, bank branches that are outside any formal clearing arrangement and their customers face hardships due to the longer time is taken and cost involved in the collection of cheques presented by them.