RBI to kick off cheque truncation soon

The Reserve Bank of India (RBI) will kick off a pilot project on 'truncation of cheques' at Delhi in a year.

The central bank wants to test the 'proof of concept' pertaining to truncation of cheques at the national capital before rolling it out at the other three metros.

"Real time gross settlement, cheque truncation, e-cheques and national ATM pool are the building blocks for putting Indian banking on par with what obtains in developed countries. We are making good progress on all the four fronts," R B Barman, executive director, RBI, said.

In truncation of cheques, cheques will be scanned and the electronic image, instead of the physical cheque, will be transmitted in the clearing cycle.

Cheques are truncated for the purpose of avoiding physical movement of paper instruments, thereby ensuring faster clearing and reduction in processing costs.