Implementation of CTS — Dispensation of the requirement of forwarding of government cheques in physical form to government

RBI had issued cir­cu­lar on Sep­tem­ber 2014 for Imple­men­ta­tion of CTS — Dis­pen­sa­tion of the require­ment of for­ward­ing of gov­ern­ment cheques in phys­i­cal form to gov­ern­ment vide cir­cu­lar no: DGBA.GAD.No.H ‑1204/42.01.035/2014 ‑15 dat­ed Sep­tem­ber 18, 2014. It is to be noti­fied that the same was to be applic­a­ble from 1^st Octo­ber 2014. The same was extend­ed to 1^st Jan­u­ary, 2015 via cir­cu­lar no: DGBA.GAD.No.H — 1463/42.01.035/2014–15 dat­ed Sep­tem­ber 30, 2014 & fur­ther on 1^st Jan­u­ary the date of imple­men­ta­tion has extend­ed with­out spe­cif­ic date cir­cu­lar no: DGBA.GAD.No.H — 2887/42.01.035/2014 ‑15.

RBI had issued cir­cu­lar on Sep­tem­ber 2014 for Imple­men­ta­tion of CTS — Dis­pen­sa­tion of the require­ment of for­ward­ing of gov­ern­ment cheques in phys­i­cal form to gov­ern­ment vide cir­cu­lar no: DGBA.GAD.No.H ‑1204/42.01.035/2014 ‑15 dat­ed Sep­tem­ber 18, 2014 noti­fies that:

As part of enhanc­ing the effi­cien­cy in cheque clear­ing, Reserve Bank has intro­duced CTS for clear­ance of cheques facil­i­tat­ing the pre­sen­ta­tion and pay­ment of cheques with­out their phys­i­cal move­ment. While this process has sta­bi­lized, the cur­rent require­ment of for­ward­ing the gov­ern­ment cheques in phys­i­cal form, after pay­ment to the Gov­ern­ment Depart­ments, requires a change. The mat­ter relat­ing to dis­pen­sa­tion of this require­ment was tak­en up with the Gov­ern­ment and we are pleased to inform that the Con­troller Gen­er­al of Accounts, Min­istry of Finance, New Del­hi has giv­en approval to our pro­pos­al of doing away with the require­ment of return­ing paid gov­ern­ment cheques back to Gov­ern­ment Depart­ments con­cerned. Accord­ing­ly, the fol­low­ing mod­i­fi­ca­tions in the “Mem­o­ran­dum of Instruc­tions issued to Agency Banks for con­duct­ing gov­ern­ment busi­ness” will be effected:-

1. Both the pre­sent­ing banks and drawee banks would con­tin­ue to dis­charge their duties pre­scribed under var­i­ous Acts/Regulations/Rules such as the Nego­tiable Instru­ments Act 1881, Bankers’ Books Evi­dence Act 1891, Clear­ing House Reg­u­la­tions, Rules framed under CTS, etc. The gov­ern­ment cheques would be paid in CTS clear­ing based on their elec­tron­ic images.
2. In case any drawee bank desires to ver­i­fy the gov­ern­ment cheque in phys­i­cal form before pass­ing it for pay­ment, the image would be returned unpaid under the rea­son “present with doc­u­ments”. The pre­sent­ing bank shall ensure that the instru­ment is pre­sent­ed again in the next applic­a­ble clear­ing ses­sion with­out any ref­er­ence to the Account holder.
3. The pre­sent­ing banks are required to pre­serve the phys­i­cal cheques in their cus­tody secure­ly for a peri­od of 10 years as required under CTS. In case some spe­cif­ic cheques are required for the pur­pose of any inves­ti­ga­tion, enquiry, etc., under the law, they may be pre­served beyond 10 years. The images of all the gov­ern­ment cheques paid should be pre­served by the drawee banks like­wise for a peri­od of 10 years.
4. The gov­ern­ment cheques paid by a drawee bank across its counter by way of Cash with­draw­al or Trans­fer also need to be trun­cat­ed and pre­served for 10 years. Ade­quate safe­guards should be built to ensure that these images are cap­tured sep­a­rate­ly by the drawee banks and not mixed up with the images of the instru­ments received for pay­ment in clear­ing. A com­mon elec­tron­ic file con­tain­ing the images of all the cheques paid should be cre­at­ed, on a dai­ly basis.
5. The drawee bank should con­tin­ue to send the pay­ment scrolls, month­ly DMS, etc., to Gov­ern­ment Depart­ment as hith­er­to. The respec­tive images of paid cheques (by way of cash, clear­ing and trans­fer) should be sent to the Gov­ern­ment by way of elec­tron­ic media or through a CD depend­ing upon their vol­ume on daily/weekly/monthly basis, as per their requirement.
6. At any time dur­ing the preser­va­tion peri­od of cheques, for the pur­pose of rec­on­cil­i­a­tion, enquiry, inves­ti­ga­tion, etc., the Gov­ern­ment may require any paid cheque in phys­i­cal form for which it would approach the drawee bank. When­ev­er so demand­ed by the Gov­ern­ment, the drawee bank shall arrange to fur­nish the cheques paid by it by way of Cash and Trans­fer imme­di­ate­ly. In case of cheques paid by way of clear­ing, the same should be sup­plied to Gov­ern­ment with­in a rea­son­able peri­od after obtain­ing it from the pre­sent­ing bank. It is the respon­si­bil­i­ty of the pre­sent­ing bank to com­ply with the require­ment of the Gov­ern­ment for any phys­i­cal cheque and fur­nish the same to the respec­tive drawee bank.
7. At present, the CTS is oper­at­ed on grid basis. Hence, the gov­ern­ment cheques drawn on RBI / agency banks may be pre­sent­ed against the drawees with­in the grid only.
8. As hith­er­to, the drawee bank should con­tin­ue to send the pay­ment scrolls, month­ly DMS, etc., to Gov­ern­ment Depart­ment. They should ensure that the mistakes/ dis­crep­an­cies point­ed out are rec­ti­fied as per pro­ce­dure, miss­ing images of paid cheques are sub­mit­ted imme­di­ate­ly, the copies of the scrolls duly ver­i­fied by the PAO are kept on its record, etc.

Down­load Main Cir­cu­lar of CTS of Govt Cheque

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