Transcript
CHEQUE TRUNCATION SYSTEM(CTS) PROJECT
By
REEMA DAWRA(07/2010)
RAHUL YADAV(01/2010)
KHEM RAJ(19/2010)
ASHWINI DURGE(18/2010)
SHYAM SHARMA(14/2010)
INDEXI
ntroduction
A
mendment In ACTS
C
omparison of Current System and CT system
R
egulatory Perspectives
C
TS Process Flow & Image Standards
W
orking Group on CT and their recommendations
C
TS – Benefits
R
ole of Banks & RBI
P
ilot Project at New Delhi(2006) ; Chennai (2008) and Mumbai(2011)
INTRODUCTION R
eserve Bank of India is undertaking a new retail payment systems initiative for
the introduction of an Image based Cheque Truncation System in the country,
which is aimed at improving the current process of realisation of cheques which
have to be physically presented to the drawee branch for payment.
C
heque Truncation is settlement of clearing transactions on the basis of images
and electronic data without the physical movement of the instruments. The
Clearing Cheque is truncated at the Presenting bank itself.
C
TS allow Institute to Truncate cheque at “point of capture” to the capabilities of
“Paying Bank” electronically and Return Cheque Electronically. CTS require
Electronic Image along with MICR field, date of presentation, presenting bank.
No movement of cheque is required
HISTORYR
equest For Information sought from the various vendors in
December
2003.
R
equest for Proposal sought from Vendors in June 2004.
C
ircular on Cheque Truncation to Banks issued on July 1, 2004.
T
echnical Bids of the Vendors opened on July 21, 2004. Technical
evaluation
over.
C
ommercial Bids Opened on April 1, 2005.
R
eference Site Visit over in May 2005.
N
egotiations on with the L1 Vendor.
CONT…C
ommittee formed by CGA to look into the various rules and
procedures
to be amended for Govt. participation.
Internal Committee formed in RBI for similar purposes.
Image Standards already decided.
Standardized Image friendly cheque format designed.
Procedural guidelines drafting group formed. First draft already ready.
Circular issued on September 1, 2005 outlining the role of the
participating banks.
AMENDMENTSC
TS introduced in Consonance with amendment in:
Negotiable Instruments Act 1881
IT Act 2000
Banker’s Book Evidence Act 1891
“
Cheque” -…it includes the electronic image of a truncated cheque and a
cheque in electronic form
CURRENT CHECK CLEARING SYSTEM
PAYOR
Paying Institutions
Payee
DepositoryInstitution
Deposit Slip
CHEQUE TRUNCATION – CONCEPTUAL DIAGRAM
PRESENTING BANK
PRESENTING BANK
DRAWEE BANK
DRAWEE BANK
Service Branch
(Bank Image ServiceBureau)
Common
Warehouse
ChequeProcessi
ngCenter
Service Branch(Drawee Bank)
Return Flow
REGULATORY PERSPECTIVES
R
eduction of Operational Risk in Banking Operations
–
Clearing is a highly fraud prone operation
D
eveloping Standards
– Image
standards
– Cheque
standards,
–
Operating standards,
–
Defining roles and Responsibilities
CONT…C
ertification :
– for
participation in CTS,
–
setting up Warehouse
L
egislation
–
Amendments to NI, IT and BBE Acts.
D
evelopmental Role
–
Major developments in Payment Systems Spearheaded by RBI.
CTS PROCESS FLOW
PRESENTING BANK
CLEARING HOUSE
COMMON WAREHOUSE
PAYING BANK
Outward Cheques’ MICR & Image(1)
Inward Return Cheques’ MICR & Image(4)
Physical Cheques’ are archive
Outward Cheques’ MICR & Image(2)
Outward Return Cheques’ MICR (3)
Cheques’ MIRC data & Image are captured at the Presenting Bank
CONT…
IMAGE STANDARDS
B
lack and White : 200 dpi, 2bit (16 level), TIFF image with CCITT G4
Compression
G
rey Scale : 100 dpi, 8 bit (256 level), Jpeg image with Jpeg
compression
G
rey Scale Front and B/W front and back images used for processing.
M
ICR line will continue to be in E13 B font.
FORWARD ORIGINAL IRD OF PERSONAL-SIZE CHEQUE, FRONT
FORWARD ORIGINAL IRD OF PERSONAL-SIZE CHEQUE, BACK
RECOMMENDATIONS
The physical cheque will be truncated within the
presenting bank.
Within the presenting bank the point of truncation could
be decided by each individual member bank providing for
Service Bureau models where banks can approach or set
up Service Bureaux for capturing images and MICR data.
Settlement will be generated on the basis of current MICR
code line data.
CONT…
Electronic images will be used for payment processing.
Grey scale technology will be deployed for imaging.
Images will be preserved for eight years.
A Centralised Agency per clearing location will act as
an image warehouse for the banks. Group
recommended norms for agencies to provide the
service.
Public Key Infrastructure will be deployed to protect
images and data flow over the network
BENEFITS OF CTS
BENEFITS OF CHEQUE TRUNCATION
T
hree Dimensions of CT
-
Operationally Efficient ;Cost Effective & Customer Service
Benefits
C
learing and forwarding times will reduce
F
raud can be detected at early points and addressed more effectively
O
perational costs can be brought down dramatically along with cycle times
M
inimizing Float and hence the misuse of float funds and preventing scams
I
nter branch reconciliation will be smoother:
RISKS IN CHEQUE TRUNCATION
If a drawee bank chooses to verify signatures on the images of cheques above a
cut-off amount only, then it runs the risk of paying some forged instruments.
Banks will have to take adequate measures to ensure that all necessary
safeguards are provided for – in consonance with legal requirements and banking
practice while making payments, especially for high value instruments
If the MICR data given by the bank is not that matching with the day’s image
the bank has sent for collection, it may lead to erroneous settlement and large
returns
The Warehousing Agency for images and physical storage of cheques might not
be able to produce the image or the physical cheque demanded by the bank. This
may lead to legal complications and assignment of liabilities
BANKS & RBI ROLES
R
eengineer Internal Process
V
endor Selection And Integration of CHI with Bank’s Software
N
etwork All the Branches
P
oint Of Truncation – Internal Matter of Banks
R
BI provides CHI or Software & Integration has to be done by banks
I
mage and Data Standards would be open and inter-operable
PILOT PROJECT R
eason for Pilot Project: Cheque volumes, Infrastructural requirements
and Other influencing factors for an all India based implementation .
I
n End March 2006 at NEW DELHI started CTS Pilot Project. Followed
by Pilot Project in Chennai(2008) and Mumbai(2011)
N
ew Delhi Clearing House has 82 direct bank members & 2500 bank
branches & Project unique as it is biggest single site
I
ncludes 3 aspects of CTS - POD; Settlement & Archive
Pilot Cheque Truncation Project at National Capital RegionChecklist for the Banks
1 Deciding point/s of outward truncation within the bank September
2Assessing the networking infrastructure required for transmission of images & MICR data to the Clearing House and internal networks of the bank
September
3Deciding point/s of inward payment processing of images and MICR data
September
4
Deciding on the systems for storage of inward and outward images in an electronic form and their subsequent retrieval, retention period for the outward presentation and inward instruments online in an electronic form.
September
5Assessing the hardware & software requirement for outward & inward clearing, storage of outward/inward images/ data etc.
September
6Deciding on the re-engineering of the payment processing workflow; and training & reorientation of the staff concerned
September
7Finalising/ shortlising vendor/s for acquisition of necessary hardware/ software and for integration of CHI with the existing banking/ clearing applications of the bank
October
8 Finalisation of the Procedural Guidelines November
9Awareness Training Programme for all officers and staff members associated with clearing operations
December
10 Installation of Hardware and Software January
11 Commencement of Test Runs with dummy cheques First week of February, 2006
12 "Live Run" Last Week of March 2006
HYBRID TRUNCATION MODEL
T
here are 3 Models: Peer to Peer; Clearing House & Hybrid Model
A
s the banks in New Delhi are at different stages of Technology the model
accommodates all of them.
Fully Networked banks may come by networks.
Media submission also allowed.
Banks may use the services of Image Service Bureaus
REFERENCES http://www.bis.org
http://www.thehindubusinessline.com
http://www.cisco.com/go/banking
http://www.rbi.org.in
http://www.federalreserve.gov
http://www.dnaindia.com/money/report_a-pan-india-cheque-
truncation-system-five-years-away_1336380
http://en.wikipedia.org/wiki/Cheque_truncation_system
http://www.rbi.org.in/scripts/NotificationUser.aspx?
Mode=0&Id=1756
http://www.iba.org.in/events/Cheque%20Truncation_Kaza
%20Sudhakar_RBI.PDF
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