Date:10/06/2005 URL: http://www.thehindubusinessline.com/2005/06/10/stories/2005061001870600.htm

Back Cheque truncation system soon

Our Bureau

Bangalore , June 9

THE Reserve Bank of India is introducing a cheque truncation system in the country to accelerate clearing operations.

Inaugurating the public sector Syndicate Bank's electronic payment mechanism for utilities here on Thursday, Mr. V Leeladhar, Deputy Governor of RBI, said the system would be initially taken up as a pilot project in NCR before being extended to the rest of the country. The new facility will enable cheque clearance on a T+0 basis. This implies that the customers' outstation cheques will be cleared on the same day it is deposited and the accounts settled.

He said the RBI also proposed to hive off its clearing operations, once the Indian Banks Association-promoted company for electronic clearing operations became operational. Once this is done, he said, the RBI's role will be confined to being a pure regulator.

Currently, RTGS allowed for T+0 settlement. So far, about 5,000 bank branches were linked by the RTGS, said Mr Leeladhar.

Earlier, the Syndicate Bank Chairman and Managing Director, Mr N. Kanta Kumar, said his bank's payment mechanism allowed customers to settle utility payments directly through the Internet. This system is operational only in three cities - Bangalore, Mumbai and New Delhi.