A pan-India cheque truncation system (CTS) is at least five years away, K C Chakrabarty, deputy governor of the Reserve Bank of India (RBI), told DNA Money on Monday.
“It is not only the technology, but also the system and process that will have to be in place for implementing this system across the country,” he said.
CTS is an image-based clearing system undertaken by central banks of various countries for faster clearing of cheques. Under this system, the cheque image is truncated at the presenting bank and thereafter, it moves through various steps in the clearing cycle and transactions are settled on the basis of electronic data and images.
CTS reduces the time needed for payment of cheques. It also minimises the associated cost of transit and the delay involved in processing. This leads to speeding up the process of collection or realisation of the cheques.
A pilot cheque truncation project was undertaken in New Delhi in December, 2007 and eventually implemented there in February 2008. The RBI had mandated US-based NCR Corporation to prepare the truncation project for New Delhi. Today, an estimated 70% of the cheques by volume in New Delhi are cleared through CTS.
The new testing destinations will be Chennai, Kolkata and Mumbai, Chakrabarty said.
RBI is yet to finalise vendors for the Chennai rollout, which is scheduled for December this calendar.
Sources say senior RBI officials and vendors met on December 9. “Once the vendors are selected, it will take about six months for the Chennai rollout,” said a source.