Image-based cheque clearing by July in National Capital Region

The Reserve Bank of India (RBI) plans to introduce an image based cheque clearing system in the national capital region (NCR) by July 2005.

Once the cheque truncation system (CTS) is in place, cheques will be scanned upon deposit and their electronic image (instead of the physical cheque itself) will be transmitted throughout the entire clearing cycle.

All the major banks in the NCR will participate in the pilot cheque truncation project, R B Barman, executive director, RBI, said on the sidelines of a seminar organised by the Indian Banks' Association (IBA) today. The RBI will issue CTS guidelines by April 2005.

On completion of the pilot project, CTS will be implemented in the other metros. In two years, the RBI should be able to eliminate physical transfer of cheques in the peak centres, he added.

State Bank of India (SBI) and Punjab National Bank (PNB) are the two major banks to participate in the pilot project. The regulator is also planning to set up a centralised clearing system and a central warehouse in Delhi.

The RBI has received bids from seven IT companies, including software solution providers such as IBM, TCS and Infosys. The central bank is currently evaluating the vendor bids, said Barman.

Chanda Kochar, executive director, ICICI Bank, said the bank opens around 1.3 lakh retail loan accounts per month for which it receives 1.4 million post dated cheques. The bank clears around a crore cheques per month, which involves huge man power, longer turn around time and huge logistic costs, she added.

The introduction of CTS will enable us to eliminate the high logistics costs and reduce turn around time, she added.