Directorate vide memo No. PA/BK-I/11-33/2013(26)/1683 to 1627 dated
26/7/2013 has directed to prevent unnecessary expenditure on payment of
commission to the nationalised banks in obtaining bank drafts and asked
to reiterate the instructions of RBI, GAD, Mumbai issued under No.
DGBA.GAD.No.H2206/31.03.2011/2007-08 dated 28/8/2007 wherein it has been
instructed that “all agency banks should provide remittance facility
to Ministries / Departments of Central and State Governments to which
they are accredited free of cost at their authorised branches,
irrespective of the mode of such remittance”.
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Showing posts with label Banking. Show all posts
Showing posts with label Banking. Show all posts
Saturday, August 17, 2013
Wednesday, July 31, 2013
UIDAI, Banks disagree on use of biometric authentication at ATMs
MUMBAI: Will banks have to spend a fortune to give customers the choice
of either putting their finger prints or swiping plastic cards to
withdraw money from ATMs and pay for purchases?
Not really, says the Unique Identification Authority of India (UIDAI),
the agency that issues the 12-digit Aadhaar numbers and is pushing for biometric authentication for
credit card and ATM transactions. But bankers disagree. Besides the
travails and risks of a new technology, upgrading each and every
automated teller machine and point of sale terminal at thousands of
merchant outlets will not come cheap, they argue.
Indeed, 'cost' is emerging as one of the issues in the brewing debate -
'Aadhaar or plastic cards'. According to a source familiar with the
subject, an RBI-constituted panel has pegged the cost of banks'
readiness for Aadhaar at 4,259 crore compared with 3,556 crore thebanking industry has to spend to upgrade machines to match a different technology they think lowers the risk of card frauds.
It's learnt that the UIDAI nominee
on the panel is likely to issue a dissent note on the estimates the
agency believes is significantly higher than what banks' migration to
Aadhaar would cost.
About a fortnight ago, the findings of the report were shared by Pulak
Kumar Sinha, the SBI general manager who heads the panel, at a luncheon
meeting with RBI Deputy Governor HR Khan. Other members of the working group were also present at the meeting.
Cost the only point of conflict
According to a UIDAI spokesman, other than cost estimates, there is no
other point on which UIDAI or any other member is in disagreement.
Responding to ET's queries, Ashok Pal Singh, deputy director general,
UIDAI, said nowhere does the report suggest that Aadhaar, in its current
shape and form, is not recommended for large-scale adoption for the
existing card base as an additional factor of authentication.
"If need be, UIDAI will put a dissenting note by way of a disclaimer on
the costing...I repeat that on no other point is UIDAI or any other
member in disagreement with the rest of the draft report," he said.
Asked whether the working group has voiced concerns on account of the
fact that if Aadhaar of a cardholder is compromised, the cardholder's
identity gets compromised for life, the UIDAI official said the report,
which should be in public domain shortly, has not made any such
observation.
The Reserve bank spokesperson did not respond to ET's email query.
UIDAI is of the view that Aadhar-based payment technology can be cost
effective and beneficial as it will take electronic payments to the
masses. "What is this great upgradation cost we are seized about? The
comparison is between cost of deploying a technology that has peaked
(chip and pin) versus a technology making its debut (Aadhaar-based
biometric authentication) and yet to acquire economies of scale... The
number of PoS terminals in the country is a pittance. A card does not
get accepted beyond two dozen major cities. Does anyone seriously
believe the aam aadmi will transact with a chip and pin card? Aadhaar
uses a light PoS with no inbuilt intelligence as authentication takes
place back end and the device is only a communication channel as against
a device that must decode and read a chip. Even common sense will defy
an assertion that the former will require a heavier and more expensive
device," said Singh.
Some of the credit card heads of banks ET spoke to said there was a
distinct possibility that RBI would ask banks to gradually roll out
Aadhaar-based biometric authentication as an additional authentication
for card transactions. "RBI may not mandate banks immediately, but may
nonetheless ask them to upgrade the technology. This is happening at a
time banks are issuing credit and debit cards that are based on EMV
technology," said a banker.
In EMV cards, the card and CVC numbers are encrypted. And, unlike the
EMV or the conventional magnetic stripe technology where cards have to
be swiped, a biometric authentication involves the bank's ATM or PoS
reading the fingerprints and matching them with the fingerprint records
aggregated by authorised authentication service agents like VISA,
National Payments Cop or Vodafone before the transaction is cleared.
Source : http://timesofindia.indiatimes.com/
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Thursday, July 04, 2013
India Post needs to become a corporate for banking foray
While most of the 26 applicants for
banking licence were usual suspects, there were a few surprises, too.
And there was at least one unusual name, although its banking ambition
was well known.
The application by the Indian postal department,
a division of the ministry of communications & information
technology, has raised some curiosity within the Reserve Bank of India (RBI). This is because RBIs new bank licence norms released in February this year talked about new bank licences in the private sector.
Since India Post
is a part of a ministry, it cannot be considered as a private sector
entity. According to RBI sources, to be eligible for a bank licence,
India Post will have to become a corporate entity, because a government
department cannot come under RBI purview. For example, if they are found
violating the know-your-customer (KYC) or anti-money laundering norms,
how can the regulator impose penalty against the sovereign, asked an RBI
official.
India Post has for long wanted to diversify into a bank and had held
discussions with RBI on this. According to experts, while the postal
departments huge rural presence definitely gives it an edge to get a
licence because both RBI and the government are emphasising on financial
inclusion.
Technically, there are challenges on whether it fulfils the prescribed
criteria but its reach definitely makes it a strong contender, sources
said.
According to the final guidelines on a new bank licence, RBI has
mandated 25 per cent of bank branches to be opened in un-banked rural
areas. New banks should also meet priority sector norms right from
inception.
Globally, there are examples of postal departments diversifying into
lending activity. Deutsche Postbank the Bonn-headquartered German
retail bank was formed from the de-merger of the postal savings
division of Deutsche Bundespost in 1990.
With around 14 million clients, 19,000 employees and total assets
amounting to ^170 billion, the Postbank Group is one of Germanys largest
financial service providers. According to its website, the lender
focuses on business with private customers as well as small and
medium-sized companies.
The 26 entities that have applied to RBI include the Tata Group, Aditya
Birla Group, the Anil Ambani Group, heavy engineering major L&T and a
host of non-banking financial companies, including a gold loan company.
Two micro finance companies have also applied.
Of the 26 applicants, there are usual suspects, but some surprises, too.
There are a few names which meet the minimum requirement, but could
rank low in terms of relative probability to get a licence. We expected a
higher number of applicants, maybe around 30-35, said Monish Shah,
senior director, Deloitte Touche Tohmatsu India.
Source : http://www.business-standard.com
Saturday, June 01, 2013
India Post set to open first ATM in Bangalore
Post office saving bank account holders in Bangalore can experience new ATM card facilities shortly
News |
by
CIOL Correspondent
BANGALORE, INDIA: When you hear 'ATM', what is the
first thing that you relate to it? I am sure, many of us, including me,
relate it to savings bank ATM card.How about an ATM card similar to a debit card/ATM card issued by a bank for postal account? Sounds different right?
Yes, the Department of Posts, in an effort to provide enhanced solutions to its customers is all set to launch the first Automated teller Machine (ATM) in Bangalore GPO premises shortly, through a core banking solution.
Last year, the department of post had announced that it has plans to set up 1,000 ATM centres at different post offices across the country, with an aim provide better customer service through IT enablement of business processes and support functions.
Implementing new banking solution enables postal department to offer all kinds of services that are offered by private banks to more than 200 million post office saving bank (POSB) account holders in 1.55 lakh post offices.
When CIOL enquired about the launch of India's first India Post ATM, an official concerned with the Bangalore post office said, on condition of anonymity, that the ATM facility will be launch shortly with good features.
He further added that the postal ATM card enables POSB account holders to withdraw money from any bank ATM, provided they have enough savings.
"POSB account holder need not rely only on Post Office ATMs," he added.
Recently, TCS announced that it had bagged a Rs 1,100 crore, six-year contract from the Department of Posts to provide end-to-end IT modernisation program to equip India Post with modern technologies and systems to enable it to serve more services to more customers, in an effective manner.
The IT modernisation project dubbed 'India Post 2012' will help the department achieve a wider reach among the Indian population through increased customer interaction channels and through new lines of business.
Saturday, May 18, 2013
What are NEFT and RTGS?
National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement
(RTGS) allow individuals, companies and firms to transfer funds from one
bank to another. You can check the RBI website for a list of NEFT and
RTGS-enabled branches of your bank. These facilities can only be used
for transferring money within the country. To opt for these, you need to
fill a form providing your or the beneficiary’s details — name, bank
branch where the account is held, the Indian Financial System Code, a
unique code for identifying the branch, and the account number and type.
You have to submit a cheque while opting for this facility. You can
also transfer funds through net banking. These are third-party transfers
and the option is available under the same header on your net banking
home page.
How much can be transferred?
There is no ceiling on the minimum or maximum amount that can be
transferred through NEFT. You can even transfer Re 1. However, a minimum
of Rs 2 lakh must be transferred through the RTGS service. There is no
cap on the maximum amount, though. However, banks may restrict the
amount you can transfer in one day. For example, HDFC Bank allows a
maximum of Rs 10 lakh to be transferred in a day.
What are the charges applicable?
According to RBI, banks cannot levy any charge for inward remittances or
on receipt of funds. However, it has capped the charges on outward
transfers through NEFT and RTGS. For transfers through the former, you
need to pay around Rs 5-25, depending on the amount. Banks cannot charge
more than Rs 5 for any transfer up to Rs 1 lakh, Rs 15 for Rs 1-2 lakh
and Rs 25 for those above Rs 2 lakh. Under RTGS, you have to pay Rs 25
for Rs 2-5 lakh and Rs 50 for anything above Rs 5 lakh.
How are the two different?
NEFT operates on a deferred net settlement (DNS) basis and settles
transactions in batches. The settlement takes place with all
transactions received till a particular cut-off time. It operates in
hourly batches — there are 11 settlements from 9 am to 7 pm on weekdays
and five between 9 am and 1 pm on Saturdays. Any transaction initiated
after the designated time would have to wait till the next settlement
time. In RTGS, transactions are processed continuously, all through the
business hours. RBI’s settlement time is 9 am to 4:30 pm on weekdays and
9 am to 1:30 pm on Saturdays. Banks can function within this time frame
or change it. Here, transfers made are quick and can be helpful in
emergencies.
What if the amount does not get credited?
If the transaction fails, the beneficiary’s bank must return the amount
to your bank within two hours and the transaction must be reversed.
Also, the bank must transfer the amount to your account within 30
minutes of receiving the same. The process can work quickly for RTGS .
But, in case of NEFT the entire process could take an additional
three-four hours.
Source: www.business-standard.com/
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Monday, March 04, 2013
Bank Account Number Portability: Lok Sabha Q&A
The Committee on Customer Service in Banks constituted by the Reserve Bank of India (RBI) under the Chairmanship of Shri M Damodaran, had recommended intra-bank Account NumberPortability
stating that the customer should also be allowed to maintain the
same account numberin a bank even when he / she moves to another city or
shifts his account to another branch in the same city. This
recommendation has been accepted by the Indian Banks Association for
implementation and RBI issued guidelines in this regard vide a circular dated April 27, 2012 whereby the banks have been advised that opening of fresh account and the Know Your Customer
(KYC) fulfillment at another branch of the same bank is not required if
full KYC was already done. Further, in order to safeguard the interest
of the banks and the customers, RBI has advised banks for allotting
Unique Customer Identification Code (UCIC) to all their individual
customers in a time-bound manner.
RBI also constituted a “Technical
Committee to examine uniform routing code and account
number structure”, which also examined the matter regarding inter-bank
portability of theaccount number. The Technical Committee is of the view
that account number portability may not be feasible even with the
implementation of International Bank Account Number (IBAN) because of
the two constraints, i.e. (i) Bank code is an integral part of IBAN and
as such, it does not facilitate account number portability across banks
(ii) even if portability of the account number is considered without the
bank code, it would give rise to a scenario where the saidnumber may
already be allotted to other customer of the destination bank. RBI has
hosted the Report of the Technical Committee on its website
www.rbi.org.in for public comments.
The above information was submitted by Ministry of Finance in reply of undermentioned Lok Sabha Question:-
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
LOK SABHA
UNSTARRED QUESTION NO 111
ANSWERED ON 22.02.2013
ACCOUNT NUMBER PORTABILITY
EKNATH MAHADEO GAIKWAD
N.S.V. CHITTHAN
Will the Minister of FINANCE be pleased to state:-
(a) whether the Government / Reserve Bank of India (RBI) has constituted any panel / committee to look into the possibility of account number portability through a unique number for each customer across the country;
(b) if so, the details thereof;
(c) whether the said panel/committee has submitted its report to the Government;
(d) if so, the recommendations made by the said panel / committee and the reaction of the Government thereto; and
(e) the time by which the recommendations made by the panel / committee are likely to be implemented?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) to (e): see above
***
via : http://karnmk.blogspot.in/
Monday, December 24, 2012
FAQs on Cheque Truncation System ( CTS)
Dear Sir,
On the eve of implementation of Cheque Truncation System, CTS-2010 to POSB Account holder, everybody should know the FAQs on CTS-2010.
Here are the FAQs issued by RBI.
1. What is Cheque Truncation?
Truncation
is the process of stopping the flow of the physical cheque issued by a drawer
at some point with the presenting bank en-route to the drawee bank branch. In
its place an electronic image of the cheque is transmitted to the drawee branch
by the clearing house, along with relevant information like data on the MICR
band, date of presentation, presenting bank, etc. Cheque truncation thus
obviates the need to move the physical instruments across branches, other than
in exceptional circumstances for clearing purposes. This effectively eliminates
the associated cost of movement of the physical cheques, reduces the time
required for their collection and brings elegance to the entire activity of
cheque processing.
2. Why Cheque Truncation in India?
As explained
above, Cheque Truncation speeds up the process of collection of cheques
resulting in better service to customers, reduces the scope for
clearing-related frauds or loss of instruments in transit, lowers the cost of
collection of cheques, and removes reconciliation-related and logistics-related
problems, thus benefitting the system as a whole. With the other major products
being offered in the form of RTGS and NEFT, the Reserve Bank has created the
capability to enable inter-bank and customer payments online and in near-real
time. However, as cheques are still the prominent mode of payments in the
country and Reserve Bank of India has decided to focus on improving the
efficiency of the cheque clearing cycle, offering Cheque Truncation System
(CTS) as an alternative. As highlighted earlier, CTS is a more secure system
vis-a-vis the exchange of physical documents.
In
addition to operational efficiency, CTS offers several benefits to banks and
customers, including human resource rationalisation, cost effectiveness,
business process re-engineering, better service, adoption of latest technology,
etc. CTS, thus, has emerged as an important efficiency enhancement initiative
undertaken by Reserve Bank in the Payments Systems area.
3. What is the status
of CTS implementation in the country?
The
Reserve Bank has implemented CTS in the National Capital Region (NCR), New Delhi and Chennai
with effect from February 1, 2008 and September 24, 2011. After migration of
the entire cheque volume from MICR system to CTS, , the traditional MICR-based
cheque processing has been discontinued in these two locations.. Based on the
advantages realised by the stakeholders and the experienced gained from the
roll-out in these centres, it has been decided to operationalise CTS across the
country. Accordingly, Grid based CTS clearing has since been started in in
Chennai by including a few banks from Coimbatore
and Bengaluru with effect from March 2012. It has also been envisaged to bring
all the bank branches in the states of Tamilnadu, Kerala, Karnataka, Andhra
Pradesh and the Union
Territory of Puducherry
under Chennai Grid in a phased manner.
4. What is the new approach to CTS implementation in the country?
The
new approach envisioned as part of the national roll-out is the grid-based
approach.
Under
this approach the entire cheque volume in the country cleared across numerous
locations will be consolidated into a much fewer number of grids. The concept
of region wise grids will be replaced and operational freedom will be given to
the operator in deciding the number of grids required to expand the reach of
CTS Pan-India and also on choosing the locations for each grid for optimum use
of the resources.
Each
grid will provide processing and clearing services to all the banks under its
jurisdiction,. Banks, branches and customers based at small / remote locations
falling under the jurisdiction of a grid would be benefitted, irrespective of
whether there exists at present a formal arrangement for cheque clearing or
otherwise.
5. Is it possible to briefly explain the entire process flow in CTS?
Yes.
In CTS, the presenting bank (or its branch) captures the data (on the MICR
band) and the images of a cheque using their Capture System (comprising of a
scanner, core banking or other application) which is internal to them, and have
to meet the specifications and standards prescribed for data and images.
To
ensure security, safety and non-repudiation of data / images, end-to-end Public
Key Infrastructure (PKI) has been implemented in CTS. As part of the
requirement, the collecting bank (presenting bank) sends the data and captured
images duly signed and encrypted to the central processing location (Clearing
House) for onward transmission to the paying bank (destination or drawee bank).
For the purpose of participation the presenting and drawee banks are provided
with an interface / gateway called the Clearing House Interface (CHI) that
enables them to connect and transmit data and images in a secure and safe
manner to the Clearing House (CH).
The
Clearing House processes the data, arrives at the settlement figure and routes
the images and requisite data to the drawee banks. This is called the
presentation clearing. The drawee banks through their CHIs receive the images
and data from the Clearing House for payment processing. The drawee CHIs also
generate the return file for unpaid instruments, if any. The return file / data
sent by the drawee banks are processed by the Clearing House in the return
clearing session in the same way as presentation clearing and return data is
provided to the presenting banks for processing. The clearing cycle is treated
as complete once the presentation clearing and the associated return clearing
sessions are successfully processed. The entire essence of CTS technology lies
in the use of images of cheques (instead of the physical cheques) for payment
processing.
6. What type of cheques can be presented for clearing through CTS?
All
types of cheques can be presented for clearing through CTS. It is no different
from the use of traditional clearing infrastructure for clearing paper cheques.
Cheques presented as part of Speed Clearing are handled in CTS as well (for
more details on Speed Clearing, the related FAQs may be referred to).
Incidentally, given the fact that images of cheques (and not the physical
cheques) alone need to move in CTS, it is possible for the removal of the restriction
of geographical jurisdiction normally associated with the paper cheque
clearing. For reaping this benefit , the concept of Grid-CTS clearing is being
envisaged as part of roll-out of CTS at Chennai. Under the grid clearing,
cheques drawn on centres included in the grid will be cleared as part of local
clearing.
7. Will there be any
change in the process for the customers?
No.
There is no change in the clearing process for customers. Customers continue to
use cheques as at present, except to ensure the use of
image-friendly-coloured-inks while writing the cheques. Of course, such of
those customers, who are used to receiving the paid instruments (like
government departments) would also receive the cheque images. Cheques with
alterations in material fields (explained in detail later) are not allowed to
be processed under the CTS environment.
8. What are the
benefits of CTS to customers of banks?
The
benefits are many. With the introduction of imaging and truncation, the
physical movement of instruments is stopped. The electronic movement of images
of cheques speeds up the process of settlement and can facilitate reduction in
the clearing cycles as well. Moreover, there is no fear of loss of instruments
in transit. Further, limitations of the existing clearing system in terms of
geography or jurisdiction can be removed, thus enabling consolidation and
integration of multiple clearing locations managed by different banks with
varying service levels into a nation-wide standard clearing system with uniform
processes and practices.
CTS
also benefits issuers of cheques. Use of images obviates the need to handle and
move physical cheques at different points. The scope for frauds inherent in
paper instruments is, thus, greatly reduced. The Corporates if needed can be
provided with images of cheques by their bankers for internal requirements,if
any. As only the images move, the time taken for receipt of paid cheques is
reduced which also gives an early opportunity to the issuers of cheques to
detect frauds or alterations, if any, in terms of what (and to whom it) was
issued and what (by whom it) was realised.
CTS
brings elegance to the entire activity of cheque processing and clearing.
Cheque frauds can be greatly reduced with introduction of minimum security
features prescribed under CTS Standards 2010, such as embedded verifiable
features such as bar-codes, encrypted codes, logos, watermarks, holograms,
etc., for early interception of altered / forged instruments. Obviating the
need to move the physical cheques is extremely beneficial in terms of cost and
time savings.
The
benefits from CTS could be summarized as follows –
·
Shorter clearing cycle
·
Superior verification and reconciliation process
·
No geographical restrictions as to jurisdiction
·
Operational efficiency for banks and customers alike
·
Reduction in operational risk and risks associated with
paper clearing
9. If a customer desires to see the physical cheque issued by him for any reason, what are the options available?
Under
CTS the physical cheques are retained at the presenting bank level and do not
move to the paying banks. In case a customer desires, banks can provide images
of cheques duly authenticated. In case, however, a customer desires to see /
get the physical cheque, it would need to be sourced from the presenting bank,
for which a request should be made to his/her bank. An element of cost / charge
may also be involved for the purpose. To meet legal requirements, the
presenting banks which truncate the cheques need to preserve the physical
instruments for a period of 10 years.
10. How would be the uniqueness of a physical cheque be captured and
imparted to the cheque image ?
CTS
in India
mandates the use of prescribed image specifications only. Images that do not
meet the specifications are rejected. As the payments are made on the basis of
the images, it is essential to ensure the quality of the images. To ensure only
images of requisite quality move in the CTS processing cycle, there is a
rigorous quality check process at the level of the Capture Systems and the
Clearing House Interface (of the presenting bank). The solution encompasses
Image Quality Assessment (IQA) at different levels. The presenting bank is
required to perform the IQA during the capture itself. Further IQA is done at
the gateway before onward transmission to clearing house. The images are
captured with digital signatures of the presenting bank and thereafter
transmitted to the Clearing House and then to the paying banks. Further, the paying
banks, if not satisfied with the image quality or for any other reason, can ask
for the physical instrument to facilitate payment processing.
Further,
the new cheque standard "CTS-2010" prescribes certain mandatory and
optional security features to be available on cheques, which will also add to
the uniqueness of the images.
11. What are the image specifications in CTS in the Indian context ?
Imaging
of cheques can be based on various technology options. The cheque images can be
Black & White, Gray Scale or Coloured. These have their associated
advantages and disadvantages. Black & White images are light in terms of
image-size, but do not reveal all the subtle features that are there in the
cheques. Coloured images are ideal but increase storage and network bandwidth
requirements. Gray Scale images are mid-way. CTS in India uses a combination of Gray
Scale and Black & White images. There are three images of each cheques that
need to be taken - front Gray Scale, front Black & White and back Black
& White.
12. How are the images of cheques taken ?
Images
of cheques are taken using scanners. Scanners also function like photo-copiers
by reflecting the light passed through a narrow passage on to the document.
Tiny sensors measure the reflection from each point along the strip of light.
Reflectance measurements of each dot is called a pixel. Images are classified
as black and white, gray-scale or colour based on how the pixels are converted
into digital values. For getting a gray scale image the pixels are mapped onto
a range of gray shades between black and white. The entire image of the
original document gets mapped as some shade of gray, lighter or darker,
depending on the colour of the source. In the case of black and white images,
such mapping is made only to two colours based on the range of values of
contrasts. A black and white image is also called a binary image.
13. How the image and data transmitted over the network is secured ?
The
security, integrity, non-repudiation and authenticity of the data and image
transmitted from the paying bank to the payee bank are ensured using the Public
Key Infrastructure (PKI). CTS is compliant to the requirements of the IT Act,
2000. It has been made mandatory for the presenting bank to sign the images and
data from the point of origin itself. PKI is used throughout the entire cycle
covering capture system, the presenting bank, the clearing house and the drawee
bank. The PKI standards used are in accordance with the appropriate Indian acts
and notifications of Controller of Certifying Authority (CCA).
14. What is Cheque Standardisation and what does CTS 2010 Standard
mean ?
Standardisation
of cheque forms (leaves) in terms of size, MICR band, quality of paper, etc.,
was one of the key factors that enabled mechanisation of cheque processing.
Over a period of time, banks have added a variety of patterns and design of
cheque forms to aid segmentation, branding, identification, etc., as also
incorporated therein a number of security features to reduce the incidence of
cheque misuse, tampering, alterations, etc. Growing use of multi-city and
payable-at-par cheques for handling of cheques at any branches of a bank,
introduction of Cheque Truncation System (CTS), increasing popularity of Speed
Clearing, etc., were a few aspects that led to prescription of certain minimum
security features in cheques printed, issued and handled by banks and customers
uniformly across the banking industry. A Working Group was set-up by RBI for
examining further standardisation of cheque forms and enhancement of security
features therein. Accordingly, certain benchmarks towards achieving
standardisation of cheques issued by banks across the country have been
prescribed like – quality of paper, watermark, bank’s logo in invisible ink, void
pantograph, etc., and standardisation of field placements on cheques. In
addition, certain desirable features have also been suggested to be implemented
by banks based on their need and risk perception.
The
set of minimum security features would not only ensure uniformity across all
cheque forms issued by banks in the country but also help presenting banks
while scrutinising / recognising cheques of drawee banks in an image-based
processing scenario. The homogeneity in security features is expected to act as
a deterrent against cheque frauds, while the standardisation of field
placements on cheque forms would enable straight-through-processing by use of
optical / image character recognition technology. The benchmark prescriptions
are collectively known as "CTS-2010 standard". Indian Banks
Association (IBA) and National Payments Corporation of India (NPCI) are
co-ordinating with the banks on implementation of the new standard.
Accordingly, the cheques issued are tested and certified by NPCI and only after
such cerification the cheques would be issued to the customers.
All
banks providing cheque facility to their customers, have been advised to issue
only 'CTS-2010' standard cheques not later than April 1, 2012 on priority basis
in northern and southern region which will be part of the northern and southern
CTS grids respectively and across the country by September 30, 2012 through a
time bound action plan.
15. What is the prescription relating to alterations / corrections
on cheque forms?
The
prescription on prohibiting alterations / corrections on cheques has been
introduced to curtail cheque frauds on account of alterations in the various
fields of cheques and to give protection to customers as well as banks. No
changes / corrections can be carried out on the cheques (other than for date
validation purposes, if required). For any change in the payee’s name, courtesy
amount (amount in figures) or legal amount (amount in words), fresh cheque
leaves should be used by customers. This would help banks in identifying and
controlling fraudulent alterations. This prohibition is applicable to cheques
cleared under the image based Cheque Truncation System (CTS) only and is
effective from December 1, 2010. It is not applicable to cheques cleared under
other clearing arrangements for the present.
16. What are the
precautions required to be taken by the banks / customers to avoid frauds?
Banks
/ Customers should use "CTS 2010" cheques which are not only image
friendly but also have more security features. Customers may request/insist
their banks for cheque forms that are compliant with the "CTS 2010"
standard. They should preferably use dark coloured ink while writing cheques
and avoid any alterations / corrections thereon. Preferably, a new cheque leaf
may be used in the event of any alterations / corrections as the cheque may be
cleared through image based clearing system as enumerated in 15 above. Banks
should exercise care while stamping the cheque forms, so that it does not
interfere with the material portions such as date, payee’s name, amount and
signature. The use of rubber stamps, etc, should not overshadow the clear
appearance of these basic features in image. It is necessary to ensure that all
essential elements of a cheque are captured in an image during the scanning
process and banks / customers have to exercise appropriate care in this regard.
17. What are the modes in which banks can participate in CTS?
There
are two modes in which banks may participate in CTS –
a.
Direct membership: Banks may participate as direct member
provided they have a settlement account with the settlement bank and have put
in place necessary infrastructure for participating in CTS.
b.
Indirect / Sub-membership: Banks may become sub-members /
indirect members of the direct members by using the infrastructure and / or
settlement services of the direct members. The settlement for such indirect /
sub-member could be done either directly (if such banks have settlement
accounts with the settlement bank) or through the direct member through whom
they are participating.
18. Is the infrastructure requirement for participating the CTS the
same for all banks ?
The
infrastructure required at the banks’ end for participating in CTS are
dedicated connectivity from the bank’s gateway to the Clearing House,
prescribed hardware and software for the CTS application.
RBI
provides member banks with the CHI (software). Banks need to procure hardware
and other software such as operating system, database and a bouquet of third
party software for the CHI. They also need to procure the application software
for their capture systems.
The
hardware requirement / sizing is based on the volume of cheques processed by
banks. Based on the volume the CHI is categorised into four types and the
hardware requirement is different for each category.
The
bandwidth requirement for each bank is calculated based a number of factors
like the peak inward and outward volume of the bank, average size of an image,
efficiency factor of the network, etc. In addition, future requirements have
been taken into consideration while calculating the bandwidth
requirement.
19. Whether the Cheque Truncation System has legal sanction?
With
amendments in the Sections 6 and 1(4), coupled with the introduction of 81 A to
the Negotiable Instruments Act, 1881, truncation of cheques is now legalized.
20. In case of need for any further clarifications, who can be
approached for guidance ?
For
any further clarifications the Contact Persons are –
The
General Manager, National Clearing Cell, Reserve Bank of India, 7th Floor,
Tower 1, Jeevan Bharati Building, Connaught Place, New Delhi – 110 001.
The
Chief Executive Officer, National Payment Corporation of India, C-9,8th Floor,
RBI Premises, Bandra-Kurla Complex, Bandra (East), Mumbai-400 051,
FAQ updated on
30/04/2012
Source :
http://www.rbi.org.in/scripts/FAQView.aspx?Id=63
Tuesday, December 18, 2012
Deadline For New Cheque Format Extended Till March 31, 2013
Bank account holders can continue to use their old format cheques for
another three months as RBI has extended the deadline for banks to issue
new cheques with uniform security features till March next year.
The Reserve Bank in a notification today said, "Taking into
consideration representations, it has been decided to extend the time up
to March 31, 2013 for banks to ensure withdrawal of non-CTS 2010
Standard cheques and replace them with CTS-2010 Standard cheques."
The central bank, however, indicated that it might impose some kind of fees for such cheques after March 2013.
This is circular given by RBI on same.
BI/2012-13/335
DPSS.CO.CHD.No.955/04.07.05/2012-13
December 14, 2012
Standardisation and Enhancement of Security Features in Cheque Forms-Migrating to CTS 2010 standards
1. A reference is invited to our circular DPSS.CO.CHD.No.
399/04.07.05/2012-13 dated September 3, 2012 advising all banks to
arrange to issue only multi-city/payable at par CTS-2010 standard
cheques not later than September 30, 2012 and to withdraw the
non-CTS-2010 Standard cheques in circulation before December 31, 2012 by
creating customer awareness. Further, banks holding post-dated EMI
cheques (received either on their own behalf or on behalf of their NBFC
clients) were advised to ensure the replacement of non-CTS-2010 Standard
cheques with CTS-2010 standard cheques before December 31, 2012.
2. While most of the banks have confirmed that they are issuing only
multi-city/payable at par CTS-2010 standard cheques at present,
representations have been received from various stakeholders requesting
for extension of the time beyond December 31, 2012 for withdrawal /
replacement of non-CTS-2010 Standard cheques / post-dated EMI cheques
with CTS-2010 standard cheques.
3. Taking into consideration these representations, it has been decided
to extend the time up to March 31, 2013 for banks to ensure withdrawal
of non-CTS 2010 Standard cheques and replace them with CTS-2010 Standard
cheques. However, it may be noted that the residual non-CTS-2010
Standard cheques that get presented in the clearing system beyond this
extended period will continue to be accepted for the clearing but will
be cleared at less frequent intervals. The modalities, charges
applicable if any, etc. are being discussed with stakeholders and a
separate communication will follow in this regard.
4. The above instructions are issued under section 18 of the Payment and Settlement Systems Act 2007 (Act 51 of 2007).
5. Please acknowledge receipt and ensure withdrawal of non-CTS-2010
Standard cheques within the extended target date indicated above.
Yours faithfully,
(Vijay Chugh)
Chief General Manager
Courtesy : http://www.investmentkit.com/
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