RBI/2009-10/323
DPSS.CO.CHD.No. 1832 / 04.07.05 / 2009-10 February 22, 2010

1. Standardisation and Enhancement of Security Features in Cheque Forms Paper-based cheque clearing continues to be one of the popular modes of initiating payment transactions in the country. During the period April-December 2009, clearing houses in the country have processed on an average around 4.5 million cheques every day. Several measures have been initiated by Reserve Bank of India to ensure that this retail payment product functions in a safe and efficient manner.

2. Introduction of Magnetic Ink Character Recognition (MICR) technology during the mideighties has been the single-most important development responsible for making the cheque clearing popular and efficient – volume-wise, speed-wise and convenience-wise.

At the banks’ end too, cheques in MICR format have facilitated post-processing ease in operations, affording credit to customer accounts and reducing reconciliation issues, thus improving customer service. 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.

3. Over a period of time, banks have added a variety of patterns and design of cheque forms to aid segmentation, branding, dentification, 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) at New Delhi for image-based cheque processing, increasing popularity of Speed Clearing for local processing of outstation cheques, etc., are a few aspects that led to looking into the need, if any, for prescription of certain minimum security features in cheques printed, issued and handled by banks and customers uniformly across the banking industry.

4. Against the above backdrop, a Working Group was set-up by the Reserve Bank of India for examining further standardisation of cheque forms and enhancement of security features therein. The Working Group comprised various stakeholders viz. commercial banks, paper manufacturers, security printers, etc., apart from Reserve Bank of India. Recommendations of the Working Group were discussed internally as also forwarded to Indian Banks’ Association (IBA), National Payments Corporation of India (NPCI) and select banks for their views. The feedback from these institutions has been received and duly considered.

5. It has since been decided to prescribe certain benchmarks towards achieving standardisation of cheques issued by banks across the country. These include provision of mandatory minimum security features on cheque forms 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 are also being suggested which could 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 straightthrough-processing by use of optical / image character recognition technology.

6. The benchmark prescriptions shall be known as “CTS-2010 standard”, specifications of which are annexed. Effective date of implementation of the standard will be advised to you in due course.
It is our intention that the revised cheque standard is implemented by banks before the roll-out of CTS at Chennai. IBA and NPCI will be co-ordinating and advising banks on introduction of additional security features on cheques as also other aspects relating to implementation of the standard across the country.

7. Please acknowledge receipt of the circular and indicate your readiness for implementing the “CTS-2010 standard”.

Banks will have to pay the compensation at savings bank interest rate in absence of a specified rate, for delayed clearance of local cheques, says RBI.

Stipulation of compensation for delay in Clearance of Local Cheques

RBI/2012-13/165
DPSS.CO.CHD.No.284/03.06.03/2012-13

August 13, 2012

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks

Madam / Dear Sir

Stipulation of compensation for delay in Clearance of Local Cheques

As you may be aware, banks are required to specify the time line for realisation of local and outstation cheques in their Cheque Collection Policies (CCP) including the compensation payable for delayed credit, if any. However, on perusal of the Cheque Collection Policies (CCPs) and Compensation Policies of various banks, it is observed that there is no mention about the compensation in respect of the delay in realisation of local cheques. Instances of delayed credit to customers’ accounts without any compensation for the delayed period beyond the time line indicated in the CCPs, in respect of local cheques, have been brought to our notice.

2. In this regard, a reference is invited to our circular DPSS. CO. (CHD) No. 873/03.09.01/2008-09 dated November 24, 2008, in terms of which, banks are required to specify the time line for realisation of cheques, including local cheques, in their respective CCPs. Paragraph 4(ii) of the circular also states that in case of local cheques, banks shall permit usage of the shadow credit afforded to the customers’ account immediately after closure of relative return clearing and in any case, withdrawal shall be allowed on the same day or maximum within an hour of the commencement of business on the next working day, subject to usual safeguards.

3. In view of the above, banks are advised to reframe their CCPs to include compensation payable for the delayed period in the case of collection of local cheques as well. In case, no rate is specified in the CCP for delay in realisation of local cheques, compensation at savings bank interest rate shall be paid for the corresponding period of delay.

4. As regards the realization period and compensation for delayed credit pertaining to outstation cheques, the instructions contained in paragraph 4(iii) of our circular dated November 24, 2008 remain unchanged.

5. Banks may note to give publicity to their revised CCPs through display board in branches and on their website for better customer service and dissemination of information. A copy of revised CCPs formulated may also be forwarded to us.

6. The above instructions are issued under Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

7. Please acknowledge receipt and ensure compliance.

Yours faithfully,

(Vijay Chugh)
Chief General Manager

Circular: http://rbidocs.rbi.org.in/rdocs/Notification/PDFs/CE1C130812FS.pdf

RBI Notification # RBI/2012-13/163 dated August 10, 2012

The Chairman and Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks

Madam / Dear Sir

Issue of multicity / payable at all branches cheques by CBS enabled banks

As you are aware, various Core Banking Solutions (CBS) implemented in banks marked a paradigm shift in Customer Services. Customers of a branch are now the bank’s customers as they can access their accounts from any branch for defined purposes. The new opportunities offered by CBS have enhanced customer service by way of offering various payment products and channels resulting in speedy movement of funds across the country. Leveraging the CBS, banks have started issuing “payable at par” / “multi-city” cheques to select customers with separate transaction codes (29, 30 and 31) by putting in place infrastructure for processing such cheques at all CBS enabled branches.

2. In this regard, Reserve Bank of India had suggested vide its circular DPSS. CO. No. 644 / 03.01.02 / 2007-08 dated October 31, 2007, that the facility of “payable at par” / “multi-city” cheques should be made available by all the CBS enabled banks to all the eligible and requesting customers taking into consideration the availability of CBS in more than 35, 000 bank branches at that time.

3. On a review of the practice followed by banks in this regard, it has been observed that banks are issuing these types of cheques differently. While a few banks are issuing “payable at par” / “multi-city” cheques with value cap, some other banks issue these cheques as per category of account (High Net-worth Customers). Instances of levying intersol charges when such cheques are cleared at other than the base branch city have also come to our notice.

4. Taking into consideration the availability of processing infrastructure for clearing outstation cheques at all clearing locations across the country and to bring about further efficiency in cheque clearing, all CBS enabled banks are hereby advised to issue only “payable at par” / “multi-city” CTS 2010 Standard cheques to all eligible customers. Appropriate Board approved risk management procedures based on risk categorization of accounts may also be put in place. Since such cheques (payable at par) are cleared as local cheques in clearing houses, customers should not be levied extra charges. The updated Board approved policy of banks in this regard may be placed on the web-site of banks, customers notified and a copy thereof forwarded to us.

5. The above instructions are issued under Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Yours faithfully,

(Vijay Chugh)