<p> This would mean that altered cheques put through the existing conventional system of clearance would be honoured, while cheques bearing changes going through the newly introduced fraud-proof inter-bank clearing system would be returned in all probabilities. <br />The regulator has also said that prohibition on alteration or correction to cheques will not apply to those cleared under other systems such as magnetic ink character recognition (MICR) clearing, non-MICR clearing, over-the-counter collection (for cash payment) or direct collection of cheques outside the clearing house arrangement.<br /><br />Earlier, the RBI, through a notification, prohibited any alteration or changes in the cheque cleared under the new clearing system of image-based CTS, since this would curb frauds committed through alteration of cheques that may affect banks and their customers alike. <br />The RBI notification had stipulated that "no changes or corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee's name, courtesy amount (amount in figures) or legal amount (amount in words) fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations."<br /><br />This, however, led to the widespread belief that the prohibition also covers cheques cleared under all kinds of existing system, prompting RBI to provide further clarifications. <br />"Collecting banks should ensure that such cheques are not accepted for presentment in CTS," RBI said.<br /><br /> Currently, image-based CTS clearing facility is available only in very few cities, since a country-wide network for this fraud-proof cheque clearing system is yet to be set up. <br />Bank experts say image-based CTS offers better reconciliation and fraud prevention while clearing cheques. <br /><br />The CTS uses the cheque image, instead of the physical cheque, for clearance. <br />The cheque image is truncated at the presenting bank. Subsequently, it moves through various steps in the cheque-clearing process and transactions are settled on the basis of images and electronic data.</p>
<p> This would mean that altered cheques put through the existing conventional system of clearance would be honoured, while cheques bearing changes going through the newly introduced fraud-proof inter-bank clearing system would be returned in all probabilities. <br />The regulator has also said that prohibition on alteration or correction to cheques will not apply to those cleared under other systems such as magnetic ink character recognition (MICR) clearing, non-MICR clearing, over-the-counter collection (for cash payment) or direct collection of cheques outside the clearing house arrangement.<br /><br />Earlier, the RBI, through a notification, prohibited any alteration or changes in the cheque cleared under the new clearing system of image-based CTS, since this would curb frauds committed through alteration of cheques that may affect banks and their customers alike. <br />The RBI notification had stipulated that "no changes or corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee's name, courtesy amount (amount in figures) or legal amount (amount in words) fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations."<br /><br />This, however, led to the widespread belief that the prohibition also covers cheques cleared under all kinds of existing system, prompting RBI to provide further clarifications. <br />"Collecting banks should ensure that such cheques are not accepted for presentment in CTS," RBI said.<br /><br /> Currently, image-based CTS clearing facility is available only in very few cities, since a country-wide network for this fraud-proof cheque clearing system is yet to be set up. <br />Bank experts say image-based CTS offers better reconciliation and fraud prevention while clearing cheques. <br /><br />The CTS uses the cheque image, instead of the physical cheque, for clearance. <br />The cheque image is truncated at the presenting bank. Subsequently, it moves through various steps in the cheque-clearing process and transactions are settled on the basis of images and electronic data.</p>
