Even as the Reserve Bank of India (RBI) has asked banks to issue cheques conforming to the cheque truncation system (CTS-2010) by March 2013, most public sector banks are yet to procure the necessary hardware.
Cheque truncation obliterates the need for physical movement of cheques to drawee branches. In this, an electronic image of the cheque is sent to the drawee bank for processing, making the clearance of the cheque much faster.
The deadline for replacing old cheques with new ones conforming to the CTS standards was January 2013, but earlier this month, the RBI extended the deadline by three months.
“Given the vast customer base of public sector banks, it is taking time to replace the old format cheques with new cheques,” said A P Hota, CEO of National Payments Corporation of India.
Most private banks in India are already using CTS-compliant cheques.
“Different banks have different procurement procedures. Some have floated tenders, while some are evaluating the tenders,” Hota added.
Although the pilot project was started way back in 2008 in Delhi and in 2011 in Chennai, the complete rollout plan was released to the banks just five months ago.
According to Hota, most banks started their procurement procedure after the government directive for the CTS rollout had come.
It will take minimum 10-15 weeks to deliver the equipment and there are only a limited number of vendors offering such equipment. “These factors are delaying implementation of CTS and we are trying to meet the deadline,” said Hota.
While banks are supposed to complete issuing new format cheques to customers by March 2013, the deadline for complete migration to CTS 2010 is December 2013.
