RBI regulation on cheque truncation system starts
According to the new guideline, cheque leaves with changes or corrections would not be honored. Instead of the tampered cheque, users have to issue a fresh cheque.
This guideline will be applicable only for cheques cleared under the image based clearing through CTS, which is currently operational in Delhi and will be implemented across India in future.
This directive is not applicable to cheques cleared under other clearing arrangements such as MICR clearing, non-MICR clearing, over-the-counter collection (for cash payment), or even for direct collection of cheques outside the Clearing House arrangement.
Cheque Truncation is a system of cheque clearing and settlement between banks based on electronic data/images or both without physical exchange of instrument. Here the cheque is scanned and electronically presented for settlement with the clearing house.