Your cheque is banned. Big change coming in 2019

A big change is coming to Indian banking sector in New Year, as a type of cheque will be banned after 1^st January 2019.

Non-CTS cheques used by customers of all banks including public sector banks like State Bank of India, Bank of Baroda and private sector banks like HDFC Bank and ICICI Bank will become invalid from 1^st January 2019. As far as SBI’s customers are concerned they will no longer be able to use non-CTS cheques from December 12 itself. Also they won’t payments from non-CTS cheques of other banks.

Customers can deposit their non-CTS cheque in their respective home branch and get free new CTS-2010 standard cheque book.

These changes are pursuant to RBI circular on three months ago, stating that Non-CTS cheques will be regarded as invalid starting January 1, 2019.

What is Cheque Truncation System (CTS)?

In legacy cheque clearing system, cheque used to travel physically between banks. Now with Cheque Truncation System, cheque is not physically sent to the payee bank. Instead, an electronic image is captured. The electronic image is sent with relevant vital information of the cheque like MICR band, date of presentation, presenting bank, etc. Thus it is also known as Image Based Clearing system or ICS.

The obvious benefit is shortening of clearing process as there is no physical movement. The cost of clearing instrument comes down drastically. Technically the realization is possible on same day. This enhances customer satisfaction through better reconciliation and prevention of frauds.

CTS 2010 standards

Refer image of CTS cheque at top. It depict various key element of CTS standards which are explained below

Standardization of fields

- Helps in physical verification of instruments of other banks

Void Pantograph

- Visible on a photo copy of 2010 standard compliant instruments

UV Logo

- Help the banks identifying the fake instruments by running them through UV lamp and looking for UV logo

Micro lettering

- In case of material/chemical alteration the Micro lettering on the instrument will get distorted. Banks will be able to identify this by physical verification or through UV lamp

Water Mark

- Cheque should carry standard water mark with the words “CTS-INDIA”

CTS 2010 Standards Bank’s logo printed with ultra-violet ink (At Printing Stage)

- Bank’s logo shall be printed in ultra-violet (UV) ink. The logo will be captured by / visible in UV-enabled   scanners / lamps. It will establish genuineness of a cheque. 

Field placements of a cheque

- Placement of significant fields on the cheque forms shall be mandated. However, placement of additional fields shall be left to banks. This will enable data capturing by Optical / Image Character Recognition (OCR / ICR) engines in offline mode and help banks in automating their payment processes. 

Important Dates

For State Bank of India customers: SBI customers won’t able to use non CTS cheques by 12^th December 2018. Neither will they receive any payment made to them using non CTS cheque post 12^th December.

For other banks: Clearance of cheques won’t happen post 1^st January 2019.

Important points for Cheque Truncation System

It is advised to use dark colored ink to write or print on cheques.

No overwriting or cancelling on the cheques is allowed.

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