How will you explain the term a truncated cheque?
Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch. Cheque truncation thus obviates the need to move the physical instruments across bank branches, other than in exceptional circumstances for clearing purposes.
At what point the cheque is truncated?
According to the Negotiable Instruments Act a truncated cheque is a cheque “which is truncated during the course of a clearing cycle either by the clearing-house or by the bank whether paying or receiving payment immediately on production of an electronic image for the transmission, substituting the further material …
What is the difference between truncated cheque and electronic cheque?
In cheque truncation the physical movement of a paper cheque issued stops and electronic flow begins while the electronic cheque is issued electronically and no paper is involved. The processing is done on the basis of this truncated cheque and physical cheque is stored. MICR data is very useful in check truncation.
What does truncated mean in banking?
According to the Merriam-Webster dictionary, the word truncate means to shorten, as if by cutting off. In the banking and finance industry, check truncation is the terminology used to describe the physical removal of paper checks from payment and deposit processes.
What are the benefits of Cheque truncation system?
Benefits of Cheque Truncation System
- Time, money and manpower expended on physical transfer of cheques from banks to clearing house are eliminated.
- Clearing related frauds become less plausible.
- Probability of cheques misplaced in transit is eliminated.
- CTS is more advanced and more secure.
How do you check if a cheque is real?
Just like currencies, cheques can easily be verified under the UV light for checking its authenticity as many of its security features glow under the UV light source. Every cheque has a unique rectangular image on the left side below the box of account number which is known as Pantographic Image.
What is an example of truncation?
Truncation lets you search for a word that could have multiple endings. The symbol for truncation is usually an * at the point where the spelling of the word could change. For example, PTSD AND music* would find articles with the terms PTSD and music/musical/musician/musicians/musicality in them.
What are the disadvantages of cheques?
Disadvantages of cheques
- Cheques are not legal tender and other creditors may refuse to accept them.
- They may be valueless if the drawer has no funds in his/her account.
- Depositing cheques into an account is time consuming.
- Cheques are not suitable for small amounts.
What is the full meaning of cheque?
A cheque, or check (American English; see spelling differences), is a document that orders a bank to pay a specific amount of money from a person’s account to the person in whose name the cheque has been issued.
Are non CTS Cheques still valid in 2020?
RBI to make Cheque Truncation System operational pan India by September 2020. This means if you are still holding a non-CTS cheque book, your cheques will not get cleared by the banks after that. Most banks have already stopped clearing non- CTS cheques since January 1, 2019.
Are old cheques still valid?
The validity of old cheque book will now end on June 30. Please note that your e-OBC/e-UNI cheques will remain valid only up to 30th June, 2021. e-OBC/e-UNI cheques already issued (post-dated) shall remain valid only up to 30th June, 2021,” the bank said in a tweet.
What are the types of Cheque?
Types of Cheques: Know What are the Different Types of Cheques
- Bearer Cheque.
- Order Cheque.
- Crossed Cheque.
- Open cheque.
- Post-Dated Cheque.
- Stale Cheque.
- Traveller’s Cheque.
- Self Cheque.
Which payment instruments are bank money?
Banker’s cheque is another payment instrument which is used by banks to settle payment obligations on behalf of their customers. This instrument is guaranteed by the bank for its full value and is similar to a demand draft.