Short Note – CTS-2010 STANDARD

Hello and welcome to ExamPundit. Today we have prepared a Short Note on CTS-2010 STANDARD. It is very important for Banking PO and Clerical Exams and Interviews.

Definition
of Cheque Truncation:

  • Truncation is the process in which an issued cheque is not
    moved physically from the drawer bank branch to the drawee bank branch. Instead
    an electronic image of the cheque is sent to the drawee branch through the
    clearing house along with relevant information like data on the MICR band, date
    of presentation, presenting bank, etc.
  • Cheque truncation thus eliminates the requirement of physically moving
    documents across bank branches except unavoidable circumstances. This
    effectively eliminates the associated cost of movement of the physical cheques,
    reduces the time required for their collection and brings elegance to the
    entire activity of cheque processing.
  • RBI decided to prescribe certain benchmarks towards
    achieving standardisation of cheques known as “CTS-2010 standard”,
    specifications.

Role of NPCI:
  • RBI has mandated NPCI to operationalise CTS. NPCI will act
    as a Cheque Processing Centre (CPC) and will process electronic cheques and
    images received from member banks

Mandatory features applicable:

  • Paper: Paper
    should have protection against alterations by having chemical sensitivity to
    acids, alkalis, bleaches and solvents giving a visible result after a
    fraudulent attack. CTS-2010 Standard paper should not glow under Ultra-Violet
    (UV) light i.e., it should be UV dull.
  • Watermark: All
    cheques shall carry a standardized watermark, with the words “CTS-INDIA”. It
    should be oval in shape and diameter could be 2.6 to 3.0 cms. Each cheque must
    hold atleast one full watermark.
  • VOID pantograph:
    Pantograph with hidden / embedded “COPY” or “VOID” feature shall be included in
    the cheques. This feature should be clearly visible in photocopies and scanned
    colour images as a deterrent against colour photocopy or scanned colour images
    of a cheque.
  • Bank’s logo:
    Member Bank’s logo shall be printed in ultraviolet (UV) ink. The logo will be
    captured by / visible in UV-enabled scanners / lamps. It will establish
    genuineness of a cheque.
  • Mandating colours and
    background:
    Light / Pastel colours so that Print / Dynamic Contrast Ratio
    (PCR / DCR) is more than 60% for ensuring better quality and content of images.
  • Prohibiting alterations
    / corrections on cheques:
    No changes / corrections should be carried out on
    the CTS cheques (other than for date validation purposes, if required). For any
    change in the payee’s name, courtesy amount or legal amount etc., fresh cheque
    forms should be used by customers. This requirement is for cheques issued under
    CTS only and no other cheques.
  • Printing of account field:
    Cheques used in current accounts and corporate customers, should be issued with
    the account number field pre-printed. Courtesy amount means amount in figures
    and legal amount means in words.

               
Importance
of CTS:
  • Speeds up the process of collection of cheques resulting in
    better service to customers
  • Reduces the scope for clearing-related frauds or loss of
    instruments in transit
  • Lowers the cost of collection of cheques
  • Removes reconciliation-related and logistics-related
    problems
  • The homogeneity in security features also act as a deterrent
    against cheque frauds.

Clearing Methods:
  • Speed Clearing is an arrangement to clear intercity non-at
    par items.
  • Grid Clearing is an arrangement that allows banks to present/receive
    cheques from/to multiple cities in a Single Clearing House through a service
    branch at one city.


What
benefit does CTS provide to Bank’s Customers?
  • It reduces the time taken to clear the cheques as well gives
    banks to offer better customer services and increases operational efficiency by
    decreasing on overheads involved in the physical cheque clearing process which
    was used earlier.
  • It also provides better reconciliation and fraud prevention.







Source: RBI, IBA, Economic Times, Moneycontrol, The Hindu



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