Lawyersclubindia Article : Cheque truncation in the Indian Scenario Page 1 of 3 Cheque truncation in the Indian Scenario During the definite two decades or so the lie and lifestyle of the consumers of banking advantage keep been influenced by the progression in technology. In air following a suitableness technological diversifys the banksa€™ bestowal order has to endure terrible transformation. The financial reforms regularity has enabled sundry competitors to penetrate the financial advantages dispense following a suitableness a excellent range of teachableness and customer sociable behaviour.
The exoteric sector banks although reacted undeviatingly to the new challenges, keep not kept stride following a suitableness the new entrants in the scene accordingly of their imminent limitations. Under the collision of technology, the banks keep been unmanageable to innovate newer products and advantages to befit elevate competitive in the always claiming customer driven dispense. The technology has made it feasible for the banks to succeed to stipulations following a suitableness the claims of customers. The order of cheque truncation is ordinary in various outlandish countries.
Denmark and Belgium are the pioneers in the truncation order. They adopted adequate cheque truncation order elevate than two decades ago. Sweden is the regular stance for having achieved adequate truncation where all the cheques can be presented and encashed at any member; irrespective of the bank on which they are drawn. The regularity of cheque truncation is not merely shrewd but as-well-behaved meets the limitations of coming electronic occurrences.
In India the store and cancelment of cheques is inferior by the stipulations of the Negotiable Instruments Act, 1881 which requires that the channels must be in congruity and keep to be visiblely presented for cancelment in due race (antecedently the punishment in the Negotiable Instruments Act). In judgment of this limitation the age enthralled for the regularitying of cheques, etc. was desire especially for the outstation cheques. In a kingdom affect India, the age enthralled for store of outstation cheques is rather tiring for the customers.
With the exhibition of technology, the Government of India and Reserve Bank of India took start to emend the customer advantage. The inaugurated clump constituted in 1982 to think the feasibility of initiative of MICR/OCR technology for cheque regularitying recommended that India should connect SWIFT (Society for Worldwide Interbank Financial Telecommunication) Network for the transmission and acceptance of interpolitical financial messages as well-behaved-behaved as implant electronic contrives of monetary occurrence in the Indian economic occurrences. The signal a€? hequea€ has been defined in Individuality 6 of the Negotiable Instruments Act as a€? beak of vary drawn on a ascertained banker and not developed to be payable inadequately than on claima€ . As per specification it is necessary that cheque should be presented for cancelment. But in truncation, the visible cheque is not presented but merely its picture shall be infectious to the paying member. ** In despicable parlance the signal a€? truncateda€ resources blasted, underhanded, mutilated, etc. As per the Negotiable Instruments Act, the truncated cheque resources a cheque which is truncated during the race of a lustration cycle.
The regularity of truncation requires the banker to apply the cheque basis into electronic contrive for the summit of impregnable maintenance or to yield the cheques at the beseech of the banker or to cater advice on cheques as and when beseeched. The cheque in the electronic contrive resources a cheque which contains the fit observation picture of a tractate cheque and is generated, written and verified in a determine order ensuring poverty impregnablety standards following a suitableness the use of digital attestations (following a suitableness or following a suitablenessout biometric attestation) and http://www. lawyersclubindia. com/articles/print_this_page. asp? rticle_id=250 7/24/2011 Lawyersclubindia Article : Cheque truncation in the Indian Scenario Page 2 of 3 asymmetric crypto order. Features of truncated cheque order Following a suitableness the exhibition of technology and cyber era, assurance of the order has acquired excellent signification. No hesitate, the financial institutions keep established providing steadsteadfast advantages than always antecedently. But the technology has brought in its check assurance bearing as-well. Under the cheque truncation order, accordingly, the picture of the cheque is fascinated at the summit of shelter where it is sealed and encrypted antecedently its transmission.
This renders it intrigue criterion. This is manufactured strictly as per interpolitical standards. The transmission betwixt the presenting, paying and payee bank is attested by a certificate antecedent as segregate of the exoteric key infrastructure. The regularity of picture certification at the banks is unreserved by an rebellious cognizance to determine that it conforms to the limitations of the laws of appearance of that kingdom. Under the cheque truncation order all cheques are infectious electronically.
The primordial cheques are keeped by the collecting banker. Indian scenario Truncation of cheques can be manufactured by the lustration seed or the bank which collects the truncated statement of the cheque. As per Individuality 81 of the Negotiable Instruments Act, the banker who receives the cancelment, is as-well-behaved reckoned to keep the observation of the cheque level following cancelment has been manufactured. Individuality 89 of the Negotiable Instruments Act says that any eminence betwixt the primordial cheque and the truncated picture should be construed as symbolical modification.
In such circumstances it is indecent on the segregate of the lustration seed or the bank to determine the achievement of the truncated picture suitableness transmitting the picture. An explication has been adventitious to Individuality 131 of the Negotiable Instruments Act vide the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. It says that it shall be the calling of the banker who receives cancelment installed on an electronic picture of a truncated cheque to determine that there is no injury, counterfeit or intrigueing manifest on the visage of the channel.
It would be seen that following the punishment the obligation of the collecting bank has increased varied. Earlier it was the comcomposition that if he collects any channel in good-tempered-tempered belief and following a suitablenessout negligence he was not unlawful for any injury, etc. But following the punishment it is indecent upon the collecting bank to demonstrate the un affectedness of the cheque following a suitableness elder range i. e. due industry. Hence the cheque truncation order has burdened the collecting banker following a suitableness a elder range of obligation.
As per sub individuality (2) of Individuality 64 of the Negotiable Instruments Act, where an electronic picture of a truncated cheque is presented for cancelment, the drawee bank is entitled to claim any elevate advice touching the truncated cheque from the bank calling the truncated cheque in circumstance of any serious misgiving. Two new sub-sections keep been adventitious to Individuality 89. As per these sub individualitys any unlikeness in manifest stamp of electronic picture and the truncated cheque shall be a symbolical modification and it shall be the calling of the bank or the lustration ouse, as the circumstance may be, to determine the fitness of the manifest stamp of electronic picture of the truncated cheque suitableness truncating and transmitting the picture. In vindictiveness of the advantages, the truncation order has its own drawbacks. The truncated cheques are exposed to injurysters who can hack into this order and diversify the deviation of the cheques. So the assurance of the order must be determined. RBI has enthralled upon itself elucidation up of a impregnable, determine and http://www. lawyersclubindia. com/articles/print_this_page. asp? article_id=250 7/24/2011 Lawyersclubindia Article : Cheque truncation in the Indian Scenario
Page 3 of 3 fruitful message network for the detested use of the banking sector unreserved as INFINET (Indian Financial Network). This network is already life used by a ample number of banks for remove of funds. INFINET uses the hindmost technology and assurance named PKI (Public Key Infrastructure) which is following a suitablenessin the juridical limitations of the Advice Technology Act, 2000. Source : - http://www. ebc-india. com/practicallawyer/index. php? option=com_content&task=view&id=8047&Itemid=54 http://www. lawyersclubindia. com/articles/print_this_page. asp? article_id=250 7/24/2011