43729056 cheque truncation

8/4/2019 43729056 Cheque Truncation

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Submitted BY:POOJA RAVAL (86)

JAYDIP SHAH (90)

NIDHI SHAH (91)

SHAISHAV THAKORE (96)


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INTRODUCTION

Banking sector is considered the heart of an economy

Cheque is the most widely accepted Negotiable

Instrument to settle transactions in the world. Papercheques provide consumers and businesses critical

alternative payments mechanism.

To improve the efficiency of the Cheque Clearing

Cycle, Reserve Bank of India has decided to

introduced Cheque Truncation System (CTS) in India.


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WHAT IS CHEQUE TRUNCATION:

A system of cheque clearing and settlement

between banks based on electronic data / imagesor both without physical exchange of instrument.


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HISTORY OF CTS:In 1960 machine readable codes were added to the

bottom of cheques in MICRformat which allowed the

clearing and sorting process to be automated.
http://en.wikipedia.org/wiki/MICRhttp://en.wikipedia.org/wiki/MICR


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The criteria for banks participating in the

Cheque truncation system are:

I. Membership of the clearing house in the NCR.

II. Membership of the Indian Financial Network(INFINET)


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CONDITION FOR MARKET TO

FUNCTION EFFICIENTLY We need a strong financial sector for high economic

growth

Sound market infrastructure are required for stimulating

financial markets

Market can function efficiently if

Clearing and settlement system functions efficiently

Money market arrangements exist to facilitate quicksettlement

Security market transactions are widespread and settledquickly

Legal system exists to enforce contracts


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Cheque Truncation is required

a.Existing Status of Cheque as Paperinstrument

b. Current Cheque Clearing ProcessTimelines o Local Clearing (including return on T+1) T +2,

o High Value Clearing (including return on T+0) T+1,

o Inter City Clearing T+ 5(+) days depending upon the end-points

c. Weaknesses of the existing process


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CHEQUE TRUNCATION SYSTEM

a. Uniqueness of our Project the first project in the world incorporating all the three components of

CTS- Proof of Deposit, Settlement and an eight year long Archive

All instruments are imaged- irrespective of value

b. Preparedness Major Retail Payment System initiative Pilot being rolled out in New

Delhi in March 2006

As per our payment system vision , next stop is the three remainingmetros and destinations with enhanced IT presence and networking

capabilities


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Continue

c. International Experience

Geographically smaller countries were quick to implement CTS

Denmark and Belgium showed the way in early 1980s

US, UK and France dominate in cheque transactions. In US 237

cheques are used on average per person per year


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SALIENT FEATURES

Within the presenting bank the point of truncationcould be decided by each individual member bank

providing for Service Bureau models where bankscan approach or set up Service Bureaux forcapturing images and MICR data.

Settlement will be generated on the basis of currentMICR code line data.

Grey scale technology will be deployed forimaging.

Public Key Infrastructure will be deployed toprotect images and data flow over the network.


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UNIQUENESS OF THE CHEQUE

WOULD BE IMPARTED TO THE

IMAGE The images captured at the presenting bank level would be transmitted to

the Clearing House and then to the drawee branches with digital

signatures of the presenting bank.

In order to ensure only images of requisite quality reach the drawee

branches, there will be a quality check process at the level of the Capture

Systems and the Clearing House Interface

This would ensure only images of requisite quality secured with the digital

signatures of the presenting banks reach the drawee branches. .

Drawers could consider using holograms, barcoding or such other

features, which would add to the uniqueness of the images.


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RBI IS PROPOSING TO

IMPLEMENT CHEQUE

TRUNCATION Banks have to decide the point of truncation and have to ensure

that the images are digitally signed after their capture.

digitally signed images would reach the service branches of the

drawee branches clearing house interface.

The service branches have to ensure that these images are moved

across their branches to ensure their processing.


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RBI SERVICES TO FACILIATE

CHEQUE TRUNCATION System development

Installation at the clearing house

Interfaces at the banks

End network

Awareness propagation and training


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RBI WORKING ON CHEQUE

TRUNCATION

Cheque truncation facility is only for MICR

cheques

No correction is allowed

Pilot project in NCR

Plan to provide function in other three metros


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INFRASTRUCTURE

REQUIREMENT Integration with the bank's database of customers

Integration with the banks current system

High speed internet connection

Integration with the hardware i.e. scanners,

computers and printers.

Integration with the Clearing House Interface


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PROCESS OF CHEQUE

TRUNCATION
http://3.bp.blogspot.com/_h2_Mvdd1Dpg/TBccSdFkNjI/AAAAAAAAAQY/DX1E1YgZCRQ/s1600/CTS-+Cheque+Truncation+System


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BENEFITS TO CUSTOMER

Faster clearing of cheque

T+0 for local clearing and T+1 for intercity

clearing

Quicker settlement of payment

Customer will get faster services


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BENEFITS TO BANK

Operational efficiency

Minimizes transaction cost

Greater customer satisfaction

Easy reconciliation & verification system


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CHALLENGES

Integration with the current system

To provide good services, it is necessary to co-ordinatenew system with the old system. It creates challenge for bank

to co-ordinate new system with the current system. If there isno co-ordinaton, this will negatively affect the banking

services also.

Security Whenever there is computer base system, it create question

of security. Cheque truncation system increase cases of fraud

& hacking also. It is necessary for the bank to provide

security to each transaction.


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Dependence on technology For the Cheque truncation, technology support is required. If

incase problem with the software, whole process is affected.

Customer acceptance To provide new services, it is necessary to know whether

customer would adopt this system or not. Cheque truncationsystem required customer migration from old system to newsystem, so it create question of customer acceptance for the

bank.


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OPPORTUNITIES

New product offering

Cheque truncation add new product offering into the

banking system. New product offering attract the new

customer for the bank & retain old customer by providinghigher customer satisfaction.

Product differention

Cheque truncation differ your product from other bank

financial services. Product differention create opportunity

for the bank.


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Continue

Improve customer satisfactionBecause of Cheque truncation system, customer will get

good services. Increase in standard of services will increase

the customer satisfaction


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Comparison Between India And Us Of

Cheque Truncation


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LATEST NEWS

Nearly 300 from 125+ Banks, Insurance, Business Schools,

IT Cos participate in Banknet's Sixth Annual Conference

on Payment Systems on 22nd Jan'10, at Mumbai. This was

the first major conference to focus on "RBIs Vision forPayments Systems in India for 2009-12".Banknet Master

Class was also conducted at the conference.

Conference also feature a Technology Exhibition.

Seventh Edition of Payments Conference will be organisedin January 2011.


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CONCLUSION

faster settlement of cheque

Minimize Lead time

Service standard of indian bankiing system


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43729056 cheque truncation

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