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RBI/2014-15/237
DGBA.GAD.No.H -1204/42.01.035/2014 -15
September 18, 2014
The Chairman & Managing Director /
The Chief Executive Officer
All Agency Banks
Dear Sir / Madam,
Implementation of Cheque Truncation System (CTS):
Dispensation of the requirement of forwarding of government cheques in
physical form to Government - Change in the Memorandum of Instructions for
reporting of government transactions
As part of enhancing the efficiency in cheque
clearing, Reserve Bank has introduced CTS for clearance of cheques
facilitating the presentation and payment of cheques without their physical
movement. While this process has stabilized, the current requirement of
forwarding the government cheques in physical form, after payment to the
Government Departments, requires a change. The matter relating to
dispensation of this requirement was taken up with the Government and we
are pleased to inform that the Controller General of Accounts, Ministry of
Finance, New Delhi has given approval to our proposal of doing away with
the requirement of returning paid government cheques back to Government
Departments concerned. Accordingly, the following modifications in the
“Memorandum of Instructions issued to Agency Banks for conducting
government business” will be effected:-
1. Both the presenting banks and drawee banks would
continue to discharge their duties prescribed under various
Acts/Regulations/Rules such as the Negotiable Instruments Act 1881,
Bankers’ Books Evidence Act 1891, Clearing House Regulations, Rules framed
under CTS, etc. The government cheques would be paid in CTS clearing based
on their electronic images.
2. In case any drawee bank desires to verify the
government cheque in physical form before passing it for payment, the image
would be returned unpaid under the reason “present with documents”. The
presenting bank shall ensure that the instrument is presented again in the
next applicable clearing session without any reference to the Account
holder.
3. The presenting banks are required to preserve the
physical cheques in their custody securely for a period of 10 years as
required under CTS. In case some specific cheques are required for the
purpose of any investigation, enquiry, etc., under the law, they may be
preserved beyond 10 years. The images of all the government cheques paid
should be preserved by the drawee banks likewise for a period of 10 years.
4. The government cheques paid by a drawee bank
across its counter by way of Cash withdrawal or Transfer also need to be
truncated and preserved for 10 years. Adequate safeguards should be built
to ensure that these images are captured separately by the drawee banks and
not mixed up with the images of the instruments received for payment in
clearing. A common electronic file containing the images of all the cheques
paid should be created, on a daily basis.
5. The drawee bank should continue to send the
payment scrolls, monthly DMS, etc., to Government Department as hitherto.
The respective images of paid cheques (by way of cash, clearing and
transfer) should be sent to the Government by way of electronic media or
through a CD depending upon their volume on daily/weekly/monthly basis, as
per their requirement.
6. At any time during the preservation period of
cheques, for the purpose of reconciliation, enquiry, investigation, etc.,
the Government may require any paid cheque in physical form for which it would
approach the drawee bank. Whenever so demanded by the Government, the
drawee bank shall arrange to furnish the cheques paid by it by way of Cash
and Transfer immediately. In case of cheques paid by way of clearing, the
same should be supplied to Government within a reasonable period after
obtaining it from the presenting bank. It is the responsibility of the
presenting bank to comply with the requirement of the Government for any
physical cheque and furnish the same to the respective drawee bank.
7. At present, the CTS is operated on grid basis.
Hence, the government cheques drawn on RBI / agency banks may be presented
against the drawees within the grid only.
8. As hitherto, the drawee bank should continue to
send the payment scrolls, monthly DMS, etc., to Government Department. They
should ensure that the mistakes/ discrepancies pointed out are rectified as
per procedure, missing images of paid cheques are submitted immediately,
the copies of the scrolls duly verified by the PAO are kept on its record,
etc.
The revised guidelines would be effective from
October 1, 2014.
Yours faithfully,
(K. Ganesha)
Deputy General Manager
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