Thursday, June 9 2005 17:45 Hrs (IST) - World Time -

Bangalore: Reserve Bank of India (RBI) is in the process of implementing a cheque truncation system that's expected to facilitate clearing of outstation cheques in no time, in sharp contrast to several days of wait for such clearance now.

Noting that cheques continue to be the dominant retail payment instrument, RBI Deputy Governor V Leeladhar said in Bangalore that to enhance efficiency in the system, RBI is in the process of implementing cheque truncation in the national capital region to quicken realisation.

The process, which has now been taken up on a pilot basis, involves settlement or clearing of transactions based on electronic data and images without the actual exchange of instruments, he said.

"The clearing instruments get truncated at the presenting bank itself", he said after launching Syndicate Bank's SyndBillPay through Internet banking. This process also ensures that there are no loss of instruments and there would also be in-built safety features.

Cheque truncation would be operationalised initially in four metros and some of the major cities such as Hyderabad and Bangalore where high bandwidth is available, Leeladhar said.

"In due course, a national cheque truncation system may emerge possibly under the new national entity for retail payment systems - that will route all inter-city cheques facilitating, thereby, customer credits on a T+1 or T+0 basis", he added.