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Check your cheque

Source : BUSINESS_STANDARD
Last Updated: Mon, Dec 03, 2012 04:11 hrs
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Over the past month, you must have got a letter, an email or an SMS from your bank asking you to surrender your old cheque book and collect the new cheque book before December 31, 2012. Or, you must have seen advertisements in newspapers or the notices put up on the bank's website or at the branch.

Beginning January 1, 2013, you will no longer be able to use bank cheques that do not conform to the cheque truncation system (CTS) 2010 standards. The new cheques have additional security features, making it difficult to counterfeit.

Old cheques may not be dishonoured immediately but it is better to get the new format cheques.

THINGS TO REMEMBER
  • Replace post-dated cheques paid for your loan EMIs 
  • If you have issued a cheque to someone, inform the person and issue a new cheque 
  • If you don't remember whom you have issued the cheque to, inform your bank of the cheque number and amount
  • If you have an old cheque, encash it immediately
  • If your cheque is dated after December 31, ask the issuer to issue a new cheque 

But before you rush to your branch, check if your cheques are indeed of the old format as several banks had started issuing new cheque books since 2011.

If you have issued old, post-dated cheques to your bank or home loan lender towards payment of your equated monthly instalments (EMIs), get in touch with them at once and replace the cheques.

An ICICI Bank spokesperson said the bank has sent requested customers to come to the asset servicing branches to replace old cheques. Housing finance major HDFC Ltd, too, has sent letters and SMSes to customers who are paying EMIs through post-dated cheques. Such customers account for less than 10 of the total customer base, said a spokesperson.

If you have issued a cheque but don't remember whom you have issued it to, inform your bank of the cheque number and the amount.

If you are holding an old-format cheque that you have to encash, do it before December 31. If it is dated after that, get in touch with the person or institution that has issued the cheque and ask for a new one.

In some cases, the local branch may tell you that they are waiting for instructions from the head office and not entertain your request for exchanging the old cheque book. But you must insist that the cheque be replaced.

NEW FORMAT CHEQUES TO HELP FASTER CLEARANCE
The biggest advantage of the new-format cheques is faster clearance. The standard and uniform features in the cheques will make it easier for scanning the cheques and transferring the prints, without the need for physical clearance.

This is called the CTS. RBI had started the process first in the National Capital Region about three years ago, and in Chennai last year. 

The next stage is to extend this to all bank branches in India, for which moving to the new-format cheques is the first step. It is expected that by the end of 2013, physical clearance of cheques will stop completely.

Over the past year or so, banks have been setting up scanners at branches. The scanned cheques are sent for clearance. By doing away with physical clearance, local cheques will now be cleared on the same day, as against two to three days earlier, says Ram Sangapure, a general manager at Central Bank of India. 

Even for outstation cheques, which now take about five days or more to be cleared, the clearing period will reduce considerably. Transactions such as buying and selling of stocks or securities, where settlement happens after funds are realised will also become faster once CTC is fully operationalised. 

While the Reserve Bank of India (RBI) deadline does not mean that after this date cheques will be dishonoured, customers must replace their old cheques, says A P Hota, managing director and CEO, National Payments Corporation of India (NPCI).

"Old cheque leaves will not start bouncing after January 1, 2013. This is an indicative deadline for banks not to issue old cheques and to ask customers to replace the old cheques. The RBI has not indicated to banks not to honour old cheques," he says.

Most banks don't charge any fees for replacing old cheques but some might charge a nominal fee.

The new cheques will have additional security features and standardised features.

(1) The new cheques will have a void pantograph, which is a wave like design embossed on the left hand of the cheque leaf. This is visible when a photocopy of the cheque is taken. In case of the old cheques, a good quality colour photocopy could pass off as a genuine cheque and forgery was easy. Now the pantograph will show up during the photocopy and will act as a deterrent against colour photocopy or scanned colour images of a cheque.

(2) The line to fill in the payee's name and the amount will have the bank's name written in micro letters , which will be visible to the naked eye only under a magnifying glass.

(3) All new cheques will carry a standardised oval-shaped watermark, with the words "CTS-INDIA", which can be seen when held against any light source. This will make it difficult for any fraudster to photocopy or print an instrument since this watermark will be introduced while manufacturing the paper.

(4) The bank's logo shall be printed in ultra-violet (UV) ink and will be visible only under UV light. This, too, will establish the genuineness of a cheque.

In addition to these security features, some other features, too, have been standardised. For instance, the new rupee symbol, the "dd/mm/yyyy" format for date, and a clear demarcation between the magnetic ink character recognition (MICR) and non-MICR portions of the cheques.

Anindya Mitra, senior vice-president, retail liabilities group, HDFC Bank, says that unused cheque books in the old format must be destroyed by customers. This is to prevent any misuse of old cheques.

Most banks don't charge any fees for replacing old cheques, but some may charge a nominal fee.


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