RBI asks banks to get ready for cheque truncation

The Reserve Bank of India (RBI) has directed all commercial banks, especially members of the New Delhi clearing house, to take steps such as finalisation of cheque truncation points and amending manuals for payment processing.

This is to enable them to prepare for the pilot project on cheque truncation in the national capital region, expected to go live in early 2006.

The central bank has held meetings with senior officials of banks at regular intervals in the capital and apprised them of the developments in the project and the preparatory steps to be taken by them.

The feedback received from banks indicates that most member banks have not taken steps outlined in the earlier communication, RBI said in a notification today.

The RBI said, "All banks, who are members of the New Delhi Bankers' Clearing House, are required to finalise the 'point of truncation' for their outward presentations "". the point in the clearing cycle, the physical movement of cheques within the banks shall stop."

The RBI has allowed banks to choose to truncate and process their cheques at the branches, ATMs, client locations, in central locations or clusters and at Image Service Bureaus.

Banks are also required to amend their existing internal banking and clearing manuals for presentation of images in clearing and acceptance of images for payment processing.

Since the payment processing activity is sensitive in any banking organisation, there would be a need for policy instructions/ guidelines to flow down to the branches from the head officeontrolling office, it added.