RBI Plans Tech For Same-day Credit Of Outstation Cheques

New Delhi, October 28: | Updated: Oct 29 2002, 05:30am hrs
The Reserve Bank of India (RBI) is examining a new technology that takes out of outstation cheques the pain of waiting for credit.

As a part of modernising the payment system we are looking at various options, including what we call cheque truncation, Reserve Bank of India spokesperson Alpana Killawala said in response to a query from FE.

This will facilitate storing of images of cheques against the present storing of physical cheques. And that can be done with scanning.

But this is at a very preliminary stage and legal changes to put in place this technology are a must, however, she added.

Induction of any modern-day technology in the payments system is incumbent on changes in the Negotiable Instruments Act allowing use of electronic banking the spokesperson pointed out..

Purple Infotech managing director P N Mahadevan, whose company is also in the fray for supplying image truncation technology with its Epson multi-functional device, says its online cheque clearing facility offers same-day credit even as it minimises the incidence of fraud by optically read security checks.

There are an estimated 40,000 bank branches in the country, with an average 800 outstation cheques being accepted at every branch. The existing system involves an elaborate procedure.

Cheques are sorted bank-wise and presented to the nodal branch for decoding and encoding.

The nodal branch presents the cheque to the clearing house, which in turn forwards it to the advising bank or branch.

Image truncation envisages same-day credit by the evening in case of local, high-value cheques, while normal physical clearing could take 48 to 72 hours.

In the case of metro-to-metro cheques, there is a time lag of four-six days while other non-metro credit could take 10 to 15 days.

Encompassing both MICR (magnetic ink character reading) and image, Mr Mahadevan said a national image archive could be built up where cheque images would be captured by the clearing house.

When a cheque is deposited, it will be scanned and its electronic image, instead of the physical cheque, could be transmitted throughout the entire clearing cycle.