By year-end cheques movement to get faster if RBI clear truncation system

At present physical movement of cheques from one bank to another takes a lot of time. In today’s time when everything is moving with fast pace it became necessary to find out way so that outstation cheque clearance is done faster.

It is expected by next year this problem will be solved as Reserve Bank of India (RBI) is set to clear an electronic process called cheque truncation system by the year-end. Under this new system scanned images of cheques will be sent through secure e-mail networks to the destination branch for verification. Once RBI gives approval for this new system banks will be able to set up these systems.

In a speech at a conclave on Indian Banking Vision 2010, V Leeladhar, Deputy Governor, RBI, said, “Over 50 banks are participating in the pilot project being implemented in the NCR (National Capital Region of Delhi). The systems may be cleared by the year-end.” This project was started by the RBI, a couple of years back.

Leeladhar also informed that the guidelines under the Payment and Settlement Systems Act (PSSA) will be released in a week’s time.

Answering to the query related to regulation of money transfer companies, RBI deputy governor Leeladhar said, “There is no oversight on money transfer companies like Visa, Mastercard and Western Union as of now. Once the PSS Act guidelines come into force they will come under the RBI purview.”

Parliament in October 2007 had passed the Act, which brought funds transfer companies — domestic as well as international — operating in India under RBI’s regulation.

At present the payment and settlement services provided by the RBI, is being offered free-of-cost, but now it will be available at a price after March 2009. “However, four banks have decided to offer these services free-of-cost even after the deadline of March 31, 2009,” Leeladhar said. Currently the services are being made available to banks for five years.

In India RBI is operating several nation-wide payment and settlement systems — Real Time Gross Settlement (RTGS), Electronic Clearance System (ECS), National Electronic Fund Transfer (NEFT) and SEFT etc. A new non-profit entity National Payments Corporation of India (NPCI) being set up, except RTGS, all these retail clearance services will be transferred to this entity.