What changed
RBI clarified that the prohibition on alterations/corrections on cheques, first outlined in February 2010, applies only to cheques processed under image-based Cheque Truncation System (CTS). The rule takes effect from December 1, 2010, and is based on a working group's recommendations to reduce cheque fraud. Cheques under MICR, non-MICR, over-the-counter, or direct collection outside clearing houses are exempt.
What it means for you
Banks must ensure CTS cheques with any alterations are not accepted for clearing, reducing fraud risk for both customers and lenders. This mandates stricter upfront scrutiny at the collecting bank. Other cheque clearing channels remain unchanged, so banks need to differentiate processes based on clearing type.
What you must do
- Update cheque acceptance procedures to reject CTS cheques with any alterations or corrections from December 1, 2010.
- Train branch staff and collection teams to identify and refuse altered CTS cheques at the point of deposit.
- Launch customer awareness campaigns about the new rule to ensure smooth transition and reduce disputes.
- Coordinate with Indian Banks' Association and NPCI for further operational guidelines on other aspects.
Who it affects
All scheduled commercial banks including RRBs, Urban co-operative banks, State co-operative banks, District central co-operative banks, Customers issuing or depositing CTS cheques
Does this ban on alterations apply to all cheques?
No, it applies only to cheques cleared under the image-based Cheque Truncation System (CTS). Cheques cleared via MICR, non-MICR, over-the-counter, or direct collection outside clearing houses are not affected.
When does this rule take effect?
The prohibition is effective from December 1, 2010. Banks must ensure compliance from that date for CTS cheques.
What should banks do if a customer presents an altered CTS cheque?
Collecting banks must not accept such cheques for presentment in CTS from the outset. They should educate customers to avoid alterations to prevent rejection.