Essay About Reserve Bank And Cheque Clearing Systems

Cheque Clearing Systems – Cts – the Initial Journey – India
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PAYMENT & SETTLEMENT SYSTEM
PAYMENT AND SETTLEMENT
SYSTEM is a mechanism for
settlement of financial
transactions between
participants. The entire
operational process and
legal sanctity of settlement is
facilitated by a system Pan
India which is monitored and
controlled by Reserve Bank
of India as per provisions of
‘The Payment and
Settlement Systems Act,
2007.
CHEQUE TRUNCATION SYSTEM
 Replacement to MICR clearing systems.
 Physical movement of cheques are restricted within
collecting bank only.
 Digitally signed scanned images of cheques are
transmitted from collecting bank to respective drawee
banks.
 “A truncated cheque” means a cheque which is
truncated during the course of a clearing cycle, either by
the clearing house or by the bank whether paying or
receiving payment, immediately on generation of an
electronic image for transmission, substituting the further
physical movement of the cheque in writing.[Section 6 – I
(b) of NI Act, 1881]
National Payments
Corporation of India • The Board constitutes
(NPCI) was of Shri N. R. Narayana
incorporated in Murthy, Chairman,
December 2008 as a Infosys Technologies
Section 25 company Ltd as the Chairman,
under Companies Act. Nominee from
There are ten core Reserve Bank of
promoter banks State India, Nominees from
Bank of India, Punjab ten core promoter
National Bank, Canara banks and Shri
Bank, Bank of Baroda, A.P.Hota, Managing
Union bank of India, Director and Chief
Bank of India, ICICI Executive Officer,
Bank, HDFC Bank, NPCI.
Citibank and HSBC.
Amendments to NI Act, 1881
Various sections of Negotiable Instruments Act, 1881
has been amended to take care of the legal
sanctity and implications of Cheque Truncation
System .U/s 6,64,81,89 and 131.
Section 6
Definition of ‘Cheque’ is amended as follows:
A “cheque” is a bill of exchange drawn on a
specified banker and not expressed to be payable
otherwise than on demand and it includes the
electronic image of a truncated cheque and a
cheque in the electronic form.
Section 6 – Explanation I (a)
inserted
The following ‘Explanation’ is inserted:
(a) “a cheque in the electronic form” means a cheque which
contains the exact mirror image of a paper cheque, and is
generated, written and signed in a secure system ensuring the
minimum safety standards with the use of digital signature
(with or without biometrics signature) and asymmetric crypto
system.
Section 6 – Explanation I (b)
inserted
The following ‘Explanation’ is inserted:
(b) “A truncated cheque” means a cheque which is truncated
during the course of a clearing cycle, either by the clearing
house or by the bank whether paying or receiving payment,
immediately on generation of an electronic image for
transmission, substituting the further physical movement of the
cheque in writing.
Section 6 – Explanation II
inserted
Explanation II.—
For the purposes of this section, the expression “clearing
house” means the clearing house managed by the Reserve
Bank of India or a clearing house recognized as such by the
Reserve Bank of India.
Section 64 (2) Inserted
(2) Notwithstanding anything contained in section 6, where an
electronic image of a truncated cheque is presented for
payment, the drawee bank is entitled to demand any further