THE Reserve Bank of India has clarified that its directive to banks, asking them not to honour cheques with alterations, will be applicable only for cheques cleared under the image-based cheque truncation system (CTS).At present, the cheque truncation project is being run only in the Delhi area with Chennai expected to move onstream soon.
The clarification paves the way for bank branches in metros like Mumbai where CTS is still not operational to accept corrected cheques. RBI's directive had created a flurry in trade circles and even among utilities that have been turning away cheques with any form of correction or alteration even if the changes were validated by the cheque drawer's signature.
- In a notification given below, RBI has clarified that its directive on prohibiting alterations/ corrections on cheques ``will be applicable only for cheques cleared under the image based Cheque Truncation System (CTS).
- RBI has also clarified that this directive is not applicable to cheques cleared under other clearing arrangements such as MICR clearing,non-MICR clearing, over-the-counter collection (for cash payment), or even for direct collection of cheques outside the Clearing House arrangement.
- Cheque Truncation is a system of cheque clearing and settlement between banks based on electronic data/images or both without physical exchange of instrument. Here the cheque is scanned and electronically presented for settlement with the clearing house.
- Currently, most of the clearing is done on the MICR system and banks often entertained cheques with alterations, be it the name of the party to whom the cheque is issued, or the date or the amount, provided the issuer of the cheques does is signature besides the correction.
Full Notification given below
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