Your Cheques can be Permanently Banned after January 1, 2019, Here’s what should you do
A very big change is about to hit the Indian banking sector, as a particular type of cheques faces permanent ban after January 1st, 2019.
Non-CTS Cheques Will Be Banned
December 31st is the last day of using Non-CTS cheques for account holders of all banks including SBI (State Bank of India), HDFC, Punjab National Bank, ICICI, Bank of Baroda and others. Non-CTS cheques have been banned by RBI starting January 1, while these cheques will be invalid for customers of SBI from December 12.
RBI had issued a notice about three months ago, stating that Non-CTS cheques will be regarded as invalid starting January 1. Following this, HDFC had sent out a circular to notice its customers regarding discontinuation of separate sessions for clearance of non-CTS cheques. Similarly, the Punjab National Bank informed their customers to replace their non-CTS compliant cheques.
What is CTS?
CTS is the abbreviation of Cheque Truncated System, which in simple terms means stopping the physical transport of cheques midway. Instead, an electronic image is generated for transmission of the amount, thus truncating the journey of the cheque by the Clearing House.
RBI’s procedural guidelines stated that cheque clearing systems involved physical movement of the cheque from one bank to another thus elongating the overall process of encashing the cheques at each stage of the clearing cycle. Also, as per a restrictive clause in the Negotiable Instruments Act, 1881, the cheques were required to be presented at the drawee branch for clearing…….Read More>>