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Based on this cheques are of two kinds: The clearing process is shown in following pictureĬheque Clearing Process before Time taken to clear the cheque How fast the money would be deposited into Shyam’s account depends on whether the whether bank of Ram and Shyam cheque’s are of same city. If the drawer’s bank decides to pay then the clearing bank proceeds to settle the check, debiting drawer’s bank and crediting the payee’s bank for the value of the check.The paying bank debits the amount from the drawer’s account. The clearing house presents paying bank with the cheque along with a payment request to drawee’s bank, which checks if there are sufficient funds in the account of drawer to pay money. It identifies postal code/city and state of the origin of the cheque. To identify the paying bank, the clearing house looks at check’s routing number, MICR, the nine-digit number at the bottom of your cheque, to the right of your account number. These are managed by the RBI, State Bank of India and other public sector banks. There are more than 1000 clearing houses operating all over the country facilitating cheque payments. A clearing house is an association of banks that facilitates payments through cheques between different bank branches within a city / place. If the beneficiary has an account with any other bank in the same or in any other city, then his banker would ensure that funds are collected from the payer’s banker through a clearing house. If the payee or beneficiary of cheque has an account in the same bank in the same city the funds are credited into his account through internal arrangement of the bank The Payee would deposit the cheque is his/her bank.
#Void pantograph on cheques verification
For banks 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 clearingĬlearing process for non CTC 2010 cheques
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Depending on whether the cheque is local or outstation, the cheque can get cleared on the same day or within 24 hours. Usage of CTS cheques also means quicker clearance, shorter clearing cycle and speedier credit of the amount to your account. This explains CTS from the regulators’ perspective Benefits to Account Holders Since there is no physical movement of cheques, there is no fear of loss of cheque in transit. CTS also reduces operational risks in banking operations as clearing is a highly fraud-prone operation.
![void pantograph on cheques void pantograph on cheques](http://media2.intoday.in/btmt/images/stories/December2012/cheque-sample_122912074846.jpg)
So, the RBI has decided to focus on improving efficiency of the cheque clearing cycle. Physical cheques still account for 75% to 80% of all transactions. However, cheques still remain a prominent mode of payment in the country. Why CTS? In India, the RBI has made available inter-bank and customer payments online in near-real time in the form of RTGS and NEFT. In its place an electronic image of the cheque is transmitted with key important data. As the name suggests, truncation is the process of stopping the flow of the physical cheque in its way of clearing. What is a Cheque Truncation System? Cheque Truncation System (CTS) is a cheque clearing system undertaken by the Reserve Bank of India (RBI) for faster clearing of cheques.