SL Rupee Cheque Clearing / Overview

Cheque Truncation

Cheque truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en route to the drawee bank branch. An electronic image of the cheque is sent to the drawee branch along with the relevant information like the presenting date, presenting banks, MICR etc. This would eliminate the need to move the physical instruments across branches, resulting in an effective reduction in the time required for payment of cheques, the associated cost of transit and delays in processing
 

Cheque Image and Truncation System (CITS)

The Payment & Settlement System Act No. 28 of 2005 has laid down the procedure for the payment of cheques electronically presented. Cheque Imaging & Truncation System (CITS) is an image-based cheque clearing system, which replaced the physical cheque with electronic information, flowing throughout the clearing cycle. This process eliminated the actual cheque movement in cheque clearing and reduced the delays associated with the physical movement of cheques. The implementation of CITS is an initiative of LankaClear (Pvt) Ltd in association with the Central Bank of Sri Lanka (CBSL) for faster clearing of cheques.
 
CITS is designed to accept images and MICR data of physical cheques submitted by direct electronic transfer. As such, the physical movement of cheques is truncated at the point of image capture and hence, the paying Bank not receive a physical cheque during the entire clearing process.
 
As a measure of enhancing the security of cheque images during the transmission and improve the efficiencies in the clearing cycle, in September 2017, LankaClear (Pvt) Ltd enabled the all-participating banks to submit the images and MICR data of physical cheques through secured Virtual Private Network (VPN). This web based system allows the participating banks to upload large volumes of cheques (in batches) and initiate their clearing almost immediately. It cuts down delay in physical movement of CDs, the risk associated with physical movements and eliminated the use of courier service involvement in CIT clearing operation. Further, this system provide security, integrity, non-repudiation and authenticity of the images and MICR data transmitted from the presenting bank to the paying bank through LankaClear (Pvt) Ltd.
 

Member Bank List

  1. Amana Bank
  2. Axis Bank
  3. Bank Of Ceylon
  4. Cargills Bank
  5. Central Bank of Sri Lanka 
  6. Citi Bank
  7. Commercial Bank
  8. Deutsche Bank
  9. DFCC Bank
  10. Habib Bank
  11. Hatton National Bank
  12. Hongkong & Shanghai Bank
  13. ICICI Bank
  14. Indian Bank
  15. Indian Overseas Bank
  16. Muslim Commercial Bank
  17. National Development Bank
  18. Nations Trust Bank
  19. Pan Asia Bank
  20. Peoples Bank
  21. Public Bank Berhad
  22. Sampath Bank
  23. Seylan Bank
  24. Standard Chartered Bank
  25. State Bank of India
  26. Union Bank of Colombo

Process Flow


 
 
 
 

Benefits

 
1.Faster clearing cycle
Prior to the launch of the CITS ,banks cleared cheques through at least seven clearing systems such as Colombo clearing, Outstation clearing, local clearing etc., and the clearing cycle ranged from 2 to 7 business days. CITS operates on an Island wide singular system which functions on a T+1 basis. Prior to CITS, banks managed their risk during periods of uncertainty, by placing a hold on the funds. The period, during which the funds were kept on hold for various periods, were based on the estimates of banks. With cheque imaging and faster processing times, banks shall be able to reduce “hold periods”.
 
2.Reduced risk
Civil unrest, floods and other major incidents can disrupt the cheque clearing processes and affect the smooth operations of banks.  More  common occurrences  such  as  courier  delays  due  to  weather conditions  can also affect  clearing performance.  In contrast an exchange based on electronic transmissions can be completed within minutes.
 
3.Faster cheque tracing and statement re-creation
With  imaging,  all  cheques  will  be  imaged  and  stored  in  an  electronic archive. An authorized staff member will be able to perform searches from their branch terminal and immediately print a hard copy showing both the front and the rear of the cheque. Statement re-creation will be speedier as well.
 
4.A variety of ways to access electronic cheque images
Banks will have the option of offering flexible, personalized customer access to cheque images.  Electronic access to images will allow businesses to reduce the storage facilities needed for returned paper cheques and conduct in-house research on their own cheque image archive. Both business  and  personal  banking  customers who have access to on-line banking shall  have the  option  of  viewing  cheque  images  online, shortly  after  the transaction  is  reflected in  their  account.  More timely account reconciliation will contribute to earlier detection of fraudulent items, and in turn, a greater chance of preventing fraud.
 
5.Potential new products and services to combat fraud
Cheque imaging shall enable banks to offer new products and services to combat   signature forgery and cheque alteration. (Altering fields to show a value, payee’s name and/or date not originally authorized by the drawer of the cheque)
 
6.Efficient and streamlined workflow when using Images
Banks can process image items concurrently instead of serial processing of physical cheques, which enables to manage work force efficiently.
 
7.Extended banking hours
With the improved efficiencies in clearing cycle, Banks can accept cheques over the counter up to a later time to submit cheques for clearing, and thereby increase the service level to the end customers.
 
8.Image retrieval
Participating banks can respond to enquiries on the cheques quickly as images can be easily retrieved, increasing the service level to the end customers.
 
9.Eliminate courier costs
Electronic transformation of cheque images and MICR data eliminates the additional spending on courier activities                                          
Quick Facts
    Useful tips when writing Cheques
    • Always write legibly or print your cheques on a cheque writer to prevent unauthorized alterations.
    • Write the amount cheque in figures as close as possible to the ‘Rs’ sign
    • It is a good practice to include the word ‘’only’’ after the amount in words.
    • Draw a line through all unused space after the payee’s name, the amount in words and figures.
    • Ensure that you write the name of the payee clearly and correctly as close as possible to the word ‘pay’.
    • If you are drawing a cheque payable to bank, always make sure that you provide sufficient details of the payee.(Eg : Sampath Card Center , Card no xxxx,xxxx,xxxx,xxxx)
    • If you want to make an amendment do so by crossing through the error and thereafter an indicate it by placing your signature.
    • Never sign blank cheques.
    • Report any misuse of cheques to your bank immediately. Use cheque book counterfoils to record details of cheques issued.
    • Keep your cheque book in a safe place and do not keep a specimen of your signature with it.
    • Keep the cheques clean and tidy to ensure the smooth processing a cheque clearing. Do not write anything on the lower part of the cheque to word covering MICR font.