Page 50 - Banking Finance March 2021

FEATURE

Cheque clearance process all

set to get faster thanks to CTS

T o expedite the process of clearance of cheques, jurisdictional limitations insignificant, and translated into

the RBI has announced bringing all bank branches
faster, better and seamless services at lower charges."
under the Cheque Truncation System (CTS). Also,
the apex bank wants to centralize the digital
clearing faster for customers.
payment helpline to address consumer grievances. CTS makes the entire activity of cheque processing and
Currently, CTS is operational in most of the clearing houses A centralized helpline to address grievances is much-needed
across India. However, some bank branches are yet to come due to the pace at which digital payments are growing. The
under its purview. central helpline will address customer queries about various
digital payment products and provide information on
About 18,000 bank branches are still outside any formal grievance redressal mechanisms available, said RBI governor
clearing arrangement. It is now proposed to bring all these Shaktikanta Das.
bank branches under CTS clearing by September.
The growth in electronic payments poses its own set of
With this measure, all bank branches in the country would challenges for customers.
be covered under the CTS. This will enhance customer
convenience and bring operational efficiency to the paper- For example, Unified Payments Interface (UPI) has
based clearing system. witnessed an annual compound growth rate of 414% since
its launch in 2016. A substantial number of failed
Under CTS, physical cheques are retained at the presenting transactions has accompanied growth.
bank and don’t move to the paying banks. Instead, an
electronic image of the cheque is transmitted to the paying According to data from the National Payments Corporation
branch through the clearing house along with relevant of India (NPCI), some banks saw a more than 9% decline rate
information like data on the MICR band, presentation date in payments in December. These are transactions declined
and presenting bank. due to technical reasons, such as unavailability of systems
and network issues on the bank or NPCI side.
“Since the physical movement of instruments is stopped
under CTS, it lowers the cost of collection of cheques and NPCI owns and operates the UPI platform.
reduces the scope of loss of instruments in transit. CTS has
also led to the consolidation of multiple clearing locations Naveen Kukreja, CEO and co-founder, Paisabazaar.com said,
managed by different banks with varying service levels into “The decision to set up a centralized 24x7 helpline for
a nationwide standard clearing system with uniform queries related to digital payment products will enhance
processes," said Adhil Shetty, CEO, BankBazaar.com. “This consumer trust and confidence in digital payment systems
has removed logistics and reconciliation-related issues for and help increase the acceptance and penetration of digital
banks. Besides, it has also made geographical and payments." (Source: Mint)

50 | 2021 | MARCH | BANKING FINANCE