On September 25, 2020, RBI has introduced a new safe method to pay cheques. According to this update, RBI has introduced CTS or Cheque truncation system. This system makes cheque payments easier as well as safer. According to this system, every cheque issued by the bank will come under CTS after 1 January 2021.
To take the security of cheques to the next step, this system is introduced for cheques of value 50,000 and above.
This will cover approximately 20℅ and 80℅ of total cheque by volume and value issued in India, respectively.
When the payer issues the cheque to the payee the respective bank will also acknowledge every detail regarding the cheque. Once this cheque is received by the payee’s bank, the respective bank can cross-check the exact information with the bank of the payer so that any kind of fraud or misleading must not be entertained.
The payer’s bank acknowledges information such as:
Along with this the payer’s bank also takes an image of the front as well as the backside of the cheque, before handing it to the beneficiary.
This was the latest update regarding the payment method through cheque. RBI introduced this system because it was often seen that details of the cheques were often changed while they were being transferred physically from one bank to another. Details like payee’s name, account number, amount, etc. were changed and it led to major banking frauds.
However, after this update, it will be made sure that no such nuisance or fraud is entertained by the payer’s bank as well as the payee’s bank.
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