cheque truncation - business mr bajwa

8/6/2019 Cheque Truncation - Business Mr Bajwa

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CHEQUE TRUNCATION CHEQUE TRUNCATION ² ² Business Opportunities Business Opportunities

K.S. Bajwa,

General Manager ±IT

Punjab National Bank




Working group on Cheque Truncation and

E - cheques

Cheque Truncation ± Concept, Benefits,

Point of Truncation

Business Process Re-engineering

Legal Issues involved

Image Service Bureaus ± Business

benefits.

AgendaAgenda




Working Group on Cheque Truncation and EWorking Group on Cheque Truncation and E--chequescheques

Physical cheque will be truncated with in the

Presenting Bank

Point of truncation will be decided by each

individual member Bank

Settlement will be generated on the basis of current MICR code line data

Contd «.




Working Group on Cheque TruncationWorking Group on Cheque Truncationand Eand E--ChequesChequesGrey scale Technology will be deployed for

imaging

Images will be preserved for 8 years

A Centralised agency per clearing location

will act as an image warehouse for the

Banks

Public key infrastructure will be deployed

to protect image and data flow over the

Network




Cheque Truncation SystemCheque Truncation System -- ConceptConcept

Movement of the physical instrument is curtailed

Image of the payment instrument is capturedalong with MICR data simultaneously

Clearing Process completed based on Electronic

data and image of the Cheques




Benefits of the CTSBenefits of the CTSFacilitate Banks to increase productivity and

avail all the benefits of smarter technology of

Electronic Cheque Presentment

Better Operational efficiency

Faster clearing cycle of payment instruments

Cost saving in terms of storage andtransport cost

Optimal Customer satisfaction




Business Opportunities - Banks

� Improved handling of post-dated cheques

deposited by the customer, as the images can

be scanned and stored and the system can

automatically process the scanned images on

the due date.

� Improved business intelligence systems can be put in place.




Business Opportunities - Banks

� Introduction of new payment system productslike e-cheques

� Better funds management

� Reduction in Transaction cost

� Better management of space and manpower

� Improved regulatory compliance.� Improved Management Information Systems

which will facilitate better decision making.




Business Opportunities - Customer

� Faster realisation of Funds

� Better funds management

� Can avoid visit to the Branch as more outlets

will be available for depositing cheques for

clearing, at convenient locations.




Business Opportunities -Vendors

� Upgrade of Technology opens up new business opportunities for vendors and solution

providers.� Can improve the Brand image of their products

by providing improved functionalities for image capture, storage and retrieval

� Scope for improvement in processingcapabilities , especially scanners and servers




Point of Truncation

� Originating Branch

� ATM / Customer Location� An identified Branch for a Cluster of Branches

� Service Bureau

� Service Branch of Originating Bank




Factors to decide point of Truncation

� Infrastructure required

� Capital Cost for set up

� Recurring Costs� Distance of the Originating branches from the point

of truncation

� Technology used

� Volume of Cheques / images that will be processed

� Facilities available for storing the cheques & imagesand their retrival




Infrastructure Required- Point of Truncation

� PC with printer

� Scanner � Network

� The configuration of scanner will depend on

the volume of Cheques ( Documents per minute) - Approximate capacity ± 30

documents per minute (dpm)




Truncation

� Capacity of scanner - Documents per minute

� Storage of Images ± ( Size of 3 prescribed

images along with Digital Signature ± 75 KB )

� Front Gray Scale, Front Black & White andReverse Black and White




� System and Procedures are to be re-looked to enable the Banks to

work in electronic cheque processing environment � Necessary guidelines to be issued to the Branches to enable them

to pass the cheque based on images instead of physical cheques

� Process of return of cheques and it¶s intimation is to be devised.

� Responsibility of genuineness of the image of the cheque is to be fixed since the drawee Bank will receive only the image of the

cheque and not the physical cheque

Business Process Reengineering

Contd..




Business Process Reengineering � As per amended NI Act, 1881 the Presenting

Bank will ensure Prima ±facie security of variousmandatory fields of the cheque like date,

availability of signature and chemical/materialalteration

� Storage of physical cheque ± As per amended NI Act, drawee Bank can requisite for physicalcheques in case of need.

� System will require storage of cheque as per ³Banking Companies preservation of RecordsRules, 1985´. Point of storage of physicalcheques is to be decided




Legal Issues involvedLegal Issues involved

-Amendments made in Negotiable

Instrument Act, Information Technology Act

-Onus of verifying the Genuineness of theCheque will shift to the stage at which it is

presented

-KYC norms are to be meticulouslycomplied by the Banks, as circulated by

RBI

Contd ..




Legal Issues involvedLegal Issues involved

-Drawee Bank will continue to verify the signature

and availability of funds

Drawee Bank will have the right to seek further

information on the veracity/ genuineness of the

chequeDrawee Bank can also seek the physical

instrument for verification




Why Image Bureaus� Smaller banks will not have sufficient volume

of cheques to justify capital investment

� Sufficient infrastructure may not be availablein the branch or service centre

� Operational costs for maintaining the system

may be relatively high if sufficient capacity

utilisation is not there.




Image Service Bureaus� Provide image capture, storage and retrieval

facilities to a group of Banks for a fee.

� High end systems are set up for faster imagecapture, transmission, storage and retrieval .

� Adequate infrastructure put in place to manage

the Bureau.




Business Benefits for set up of ImageService Bureaus

� Source of Revenue

� Economy of Scale

� Improved Technology can be used as High end

systems can be put in place.




Thank

you