Come April 1, your bank will stop accepting old cheques. So, hurry up and get your old cheque books replaced with new CTS enabled ones.
CTS (cheque truncation system) comes into effect from next month as per the directives of the Reserve Bank of India. CTS is the process of stopping the flow of the physical cheque in its way of clearing. In its place an electronic image of the cheque is transmitted with key important data.
Cheque truncation thus obviates the need to move physical instruments across branches. This effectively eliminates the associated cost of movement of physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing. It is a system which is practised worldwide in the banking sector.
CTS also reduces operational risks in banking operations as clearing is a highly fraud-prone operation.
Since there is no physical movement of cheques, there is no fear of loss of cheque in transit. Usage of CTS cheques also means quicker clearance, shorter clearing cycle and speedier credit of the amount to your account. Depending on whether the cheque is local or outstation, the cheque can get cleared on the same day or within 24 hours.
The biggest advantage is that CTS-compliant cheques are more secure than old cheques and, hence, less prone to frauds.
Various banks in the city have already started issuing new CTS-compliant cheque books on returning the old ones.
The earlier deadline to roll out the CTS-compliant cheques was January 1, which was extended by three months to April 1.
Several customers had already issued old cheques for purchase of vehicles, home loans and personal loans, to finance companies. If such customers fail to replace their old cheques with new ones, they will have to pay fine.
What is CTS?
CTS is a cheque clearing system. As the name suggests, truncation is the process of stopping the flow of the physical cheque in its way of clearing. In its place an electronic image of the cheque is transmitted with key important data.