o To introduce cheque truncation in India, a working group was constituted by the Reserve
Bank. The working group submitted Part I of its report in July 2003 and suggested a
model for the cheque truncation in India. The major recommendations of the working
The physical cheque should be truncated within
the presenting bank.
Within the presenting bank the point of truncation could be decided by each individual
member bank providing for service bureau models where banks can approach or set up
service bureaux for capturing images and MICR data.
Settlement should be generated on the basis of current MICR code line data.
Electronic images should be used for payment
Grey scale technology should be deployed for
Images should be preserved for eight years.
A centralized agency per clearing location should act as an image warehouse for the
banks. The group recommended norms for agencies to provide the service.
Public Key Infrastructure should be deployed to protect images and data flow over the
How does it work?
• A scanner in the local branch where the cheque is deposited is used to capture the image
of the cheque and send it to an automated clearinghouse and from there onto the paying
bank. Returned cheques follow the same route.
• Only 2 legs will be imaged. The returns leg is kept out. Physical cheques will remain at
• In the pilot cheque truncation project the current paper based clearing will be replaced
by image and data clearing for outward and inward and only data for return item
processing. Cheque data and images will be stored in image archives for outward and
• The archive at the clearinghouse will retain all the clearing images and data for eight
years. The paper instruments are required to be retained for eight years till further
instructions on the subject are evolved.
• The size and the configurations of the systems to be used for outward and inward
processing is a function of the banks’ bu