In a recent communication to banks from RBI deputy governor Rakesh Mohans office, the RBI has asked banks to form an internal policy group with representation of the highest level (to be headed by an executive director or chief operating officer) for guiding the cheque truncation project.
The central bank has also asked banks to form an implementation group and nominate nodal officers for the purpose. The time limit set by the central bank is December 2004.
In the first phase, RBI has decided that an image-based cheque truncation pilot project be initiated for the Bankers Clearing House in New Delhi and its nearby areas.
The project, once fully operationalised, will reduce the time for clearance of cheques and will facilitate a safer and more efficient electronic mode of payment.
The RBI has initiated steps to procure the required hardware and software systems for the central system. The steps to be taken by the banks primarily revolve around the procurement and/or outsourcing of truncation capabilities and adopting related changes in the systems and procedures, the RBI communication said.
Cheque truncation is a process in which the physical movement of the cheque is curtailed. When customers deposit their cheques in banks, digital images of cheques are generated and electronic information is captured by the collecting banks for the clearing process. The cheques are then presented to the drawee banks electronically for verification and are retained by the collecting banks.
The RBI has been working on this project for a while and a working group for cheque truncation and e-cheque was formed in January 2003 under the chairmanship of RBI executive director RB Barman to draw a road map for the project.
As per the recommendations of the RB Burman committee, images will be preserved for eight years. A centralised agency per clearing location will act as an image warehouse for the banks. The Group has also recommended specified norms for agencies to provide the service.