What changed
RBI issued a directive requiring NBFCs to migrate all cheque forms to CTS-2010 standards, which include mandatory security features like watermark, invisible ink logo, and void pantograph. NBFCs must replace any non-compliant post-dated cheques from customers before the deadline.
What it means for you
NBFCs must proactively engage with customers to swap old cheques, ensuring all instruments meet the new security benchmarks. Failure to comply could lead to cheque processing issues and regulatory scrutiny, impacting EMI collections and operational efficiency.
What you must do
- Identify all non-CTS-2010 compliant post-dated cheques in your portfolio.
- Contact customers to arrange replacement with CTS-2010 standard cheques before December 31, 2012.
- Submit a confirmation plan to your regional RBI office detailing the implementation steps.
- Update internal systems and vendor agreements to ensure future cheques meet CTS-2010 standards.
Who it affects
All NBFCs accepting post-dated cheques, Customers providing post-dated cheques to NBFCs, Cheque printing and processing vendors
What is the CTS-2010 standard?
It is a set of benchmarks for cheque forms, including mandatory security features like quality of paper, watermark, bank's logo in invisible ink, and void pantograph, along with standardized field placements.
What happens if NBFCs don't replace non-compliant cheques by the deadline?
Non-compliance may lead to cheque processing failures and regulatory action under RBI Act sections 45 JA and 45K. RBI expects a plan to be in place and confirmed to the regional office.
Does this apply to all cheques or only post-dated ones?
The directive specifically addresses post-dated cheques accepted for future EMI payments, but the standard applies to all cheque forms issued by banks.