What happens when you write a check?
By Marcie Geffner • Bankrate.com
Highlights • Checks can be handy, especially if you want to create a record of a purchase. • Write a check at a grocery store in the morning and it can hit your account that night.
npaid checks are said to be !bad checks! or to ha"e !bounced.!
Checking # High$%ield Checking # What Happens When %ou Write & Check' (n an age of plastic money, many people ha"e forgotten about or ne"er learned to use the paper checks that come with most bank, brokerage and credit union checking accounts.
High-yield checking survey
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)ewards checking still rockin* What banks do with your check + warnings for high$yield chasers + risky places for a debit card ,-., high$yield checking sur"ey /ideo High$yield checking to sa"e'
(ndeed, the "olume of checks processed each year has declined, according to a 0ederal )eser"e study of noncash payments. (n ,--1, the first year of the study, 2-.3 billion checks were processed, accounting for 2, percent of noncash payments. 4hree years later, in the last year of the study, the number of checks processed had dropped to ,+.3 billion, or only ,2 percent of noncash payments. 5till, checks can be handy, especially when someone wants to create a record of a purchase that can*t be made "ia plastic. 67amples include payments to friends, relati"es, small charities, home repair contractors, corner markets and other microbusinesses.
account and check numbers. By . which refers to te7t that can be read by a machine. cashier*s or teller*s checks. and checks deposited to brand$new checking accounts or at &4Ms. 4oday. . checks took at least a few days to flow through the processing system.-+2= < . it can hit your account tonight. 4he ability to process a check that @uickly doesn*t mean the bank must make the funds a"ailable to the customer that soon.3 billion : . the bank might release only a portion of the funds and place a hold on the balance. 4he ma7imum hold is dictated by )egulation CC. appro7imately +2 percent of interbank checks in"ol"ed electronic clearing.! 8ouglas says. according to a 0ederal )eser"e compliance guide for financial institutions.--<.C.
. 4hat increase in speed is supported by the 0ederal )eser"e study. :< percent to be e7act.-.--:. nearly all such checks. checks can be deposited. senior "ice president of electronic systems and risk management at the 5tate 6mployees* Credit nion in )aleigh.! M(C) is shorthand for magnetic ink character readable. 4here.
How checks work
How do checks get processed' 8ouglas says merchants that accept checks total each day*s receipts and then deposit the checks at a local bank.
Check it out: Checking stats
%ear &nnual numbers of checks processed .ronounced !mick$er. 4he amount is filled in by the bank or other processing authority under the account holder*s signature and to the right of the routing. (n . the dollar amount of each check is encoded into the !M(C) line! $$ the row of numbers and symbols imprinted along the bottom of each check. (t can truly ?ust fly through the system $$ all transmitted electronically.-2-. transmitted and cleared within a day. according to 5ue 8ouglas.-:<= : 5ource> 0ederal )eser"e. !(f you write a check at a big grocery store this morning. checks drawn on local or out$of$state banks.ercentage of checks cleared %ear electronically . a federal regulation that sets different hold periods for go"ernment checks.%ears ago. (nstead. transit.+. thanks to newer technology. 9.3 billion 1 . were handled electronically at some stage of the process. howe"er.
typically M(C) their own checks on site and transmit the data to their bank electronically. 4otal payment in words.
. )outing number Afor electronic clearingB. 4he readerDsorter produces images of the front and back of each check and creates an electronic file that contains all the M(C) data. Memo Adescription of paymentB. 4he date you wrote the check. 4he amount of payment.. 8ouglas says. Checking account number. a high$powered machine. 3. /ery large merchants. which combines and re$sorts the data. . 4he 0ederal )eser"e operates a national clearinghouse. +. 2. :. 8ouglas says. %our signature.erson or company recei"ing payment. optional.Diagram of a check
What's on a check?
1. and then forwards the information to each bank on a bank$by$bank basis. 4he M(C) file is then sent electronically to a clearinghouse.. /ery large banks ha"e direct lines to one another for check$clearing purposes. Check number Aalso in upper$right cornerB. 5ome banks also use regional clearinghouses. <. C. 4he paper checks are then fed into a readerDsorter. . such as national grocery store chains. .
67ample of a 5 truncated che@ue A5ubstitute checkB
. who can then pursue the customer for payment. 8. usually within a matter of weeks or months. 8ouglas says.6ach bank then matches the data file to its own customer accounts. Ware says. depending on the bank*s policies. according to /i"eca Ware.--:. once the paper check is presented at the bank.< million checks were returned unpaid in . 4hat bank then produces a copy of the original check for the merchant. it stops at the bank. payment is made. (f all goes well. senior "ice president of the (ndependent Community Bankers of &merica. the data file is flagged and sent back to the bank where the check was deposited.. 4hat*s because some banks now offer customers the ability to deposit checks remotely. the customer simply takes a picture of the check with a cellphone and sends that image to the bank to be processed.! or ()8.
Che!ue truncation Acheck truncation in &merican englishB is the con"ersion of physical che@ue into a substitute electronic form for transmission to the paying bank. the original paper checks are set aside and later destroyed. usually "ia the bankEs smartphone application.! 4he 0ederal )eser"e study found that more than .C.
Meanwhile. !(n most instances. Che@ue truncation eliminates cumbersome physical presentation of the che@ue and sa"es time and processing costs. 5ome checks don*t e"en make it that far. a Washington.! she says. (nstead of going to the bank. (f a checking account has insufficient funds or a stop$payment order has been placed. 4he unpaid check is said to be a !bad check! or to ha"e !bounced.$based trade group that represents community banks. 4he copy is known as an !image replacement document.
from where they were taken to the payee bank. which re@uired a large amount of manpower.::-s. (n some cases large retailers that recei"ed large "olumes of che@ues could also do the truncation. Fnce the che@ue has been turned into a digital document it can be processed through the banking system ?ust like any other electronic payment.::3 the Che@ues &ct . Che@ues had to be e7amined by hand at each stage. 4his is known as the clearing cycle. who would arrange for the che@ue to be returned to the drawee bank and the money credited to and debited from the appropriate accounts.:1-. 4his helped to speed up the clearing processG howe"er the law in most countries still re@uired the che@ues to be deli"ered to the payee bank. 4his process would take se"eral days. and the original che@ues were destroyed.)ear "iew
4o settle a che@ue it has to be presented to the drawee bank for payment. Friginally this was done by taking the che@ue to the drawee bank. Bank customers who recei"ed che@ues could deposit them at their own bank. (f a che@ue was dishonoured or bounced it would be physically returned to the original bank marked as such. when in . 4his became known as central clearing. howe"er as che@ue usage increased this became cumbersome and banks arranged to meet each day at a central location to e7change che@ues and settle the money. 4he M(C) codes and che@ue details are normally encoded as te7t in addition to the image. 5tarting in the mid$. which allowed the clearing and sorting process to be automated. (f the che@ue bounced it would be sent back to the bank where the che@ue was deposited.Hcitation neededI 4he bank where the che@ue was deposited would typically do the truncation and this dramatically decreased the time it took to clear a che@ue.:1-
. (n . machine readable codes were added to the bottom of che@ues in M(C) format. it was the laws related to che@ues that were the main impediment to their introduction. 9ew Jealand was one of the first countries to introduce truncation and imaging of che@ues. some countries started to change their laws to allow !truncation!> che@ues would be imaged and a digital representation of the che@ue would be transmitted to the drawee bank. as the che@ues had to be transported to the central clearing location.
<hough technology needed to e7ist to be able to truncate a che@ue. and so physical mo"ement of the paper continued.
balancing and bundling of the items. & number of other countries followed o"er the ne7t few years. 5ome banks ha"e modified their own bank systems or built proprietary system to handle truncation. and instead phased out the use of che@ues altogether. there are also a number of software companies that pro"ide commercial solutions and ser"ices. (n outward clearing the deposited items are scanned and the operator performs amount entry. as che@ues could no longer be returned. 4hose items that failed "alidation due to discrepancies are sent back to the originating branch to be corrected. 4he law also enacted the recognition and acceptance of a !substitute check! created by a financial institution in lieu of the original paper check.. the items are sent to the clearing house. 4hese systems ha"e to deal with two main processes. &ny bank that recei"es the original paper check can remo"e or !truncate! the paper check from the clearing process. & typical solution. 5ome countries decided that the effort to implement truncation could not be ?ustified for a declining payment method. &ct was implemented in the nited 5tates to authoriKe con"ersion of the original paper check into an electronic image for presentation through the clearing process. outward clearing and inward clearing. item "erification. 9ew laws needed to address ways to make sure that the digital image was a true and accurate copy of the original che@ue as well as a mechanism to enable the process to be audited to protect consumers. balancing and bundling of the items at the branch le"el. as defined by the Monetary &uthority of 5ingapore for the 5ingapore che@ue truncation system. was that a special *(mage )eturn 8ocument* was created and sent back to the bank that had truncated the che@ue. but progress was mi7ed due to the decline in the use of che@ues in fa"our of electronic payment systems.H. the Check .--+. 4hese include> F"er"iew che@ue truncation ser"ice pro"iders rovider ackage Bank5er" 8eposit9ow
.I (n . (n inward clearing. Banks and financial institutions use che@ue truncation systems AC45B to manage this process.H. account entry.I
#perations and clearing
4he security related to imaging and creating the electronic che@ue needed to be defined and the clearing process ad?usted to accommodate electronic che@ues. (t also needed to address the process for dishonoured che@ues. the items recei"ed from branches are processed in the ser"ice branch where the operator performs amount entry account entry.was amended to pro"ide for the electronic presentation of che@ues. item "erification. 4he items are then sent to a ser"ice branch. Fnce "erification is complete.
5 0iser" 8irector Check (maging 0orbes 4echnosys Mtd Che@ue 4runcation 5ystem AC45B (mage (nfo5ystems 67pressClear (nfosys $ Nack Henry L &ssociates &logent 5olutionsH2I 9ewgen 5oftware 4echnologies Check 4runcation 5ystem Fpen 5olutions FpenCheck A(sCheckB . (n addition to operational efficiency. as che@ues are still the prominent mode of payments in the country and )eser"e Bank of (ndia has decided to focus on impro"ing the efficiency of the che@ue clearing cycle. reduces the scope for clearing$related frauds or loss of instruments in transit. offering Che@ue 4runcation 5ystem AC45B as an alternati"e. 4his effecti"ely eliminates the associated cost of mo"ement of the physical che@ues. along with rele"ant information like data on the M(C) band.. including human resource
. Che@ue 4runcation speeds up the process of collection of che@ues resulting in better ser"ice to customers. and remo"es reconciliation$related and logistics$related problems. '& Why Che!ue $runcation in (ndia? &s e7plained abo"e. presenting bank. (n its place an electronic image of the che@ue is transmitted to the drawee branch by the clearing house. C45 offers se"eral benefits to banks and customers.)..rocess 5tudio 5ybrin 5ystems Che@ue 5olutionH+I 4ata Consultancy 5er"ices $ W& 5& 0inancial 5ystems Fptima2 Jylog 5ystems Mimited C45 Che!ue $runcation System %& What is Che!ue $runcation? 4runcation is the process of stopping the flow of the physical che@ue issued by a drawer at some point with the presenting bank en$route to the drawee bank branch. reduces the time re@uired for their collection and brings elegance to the entire acti"ity of che@ue processing. other than in e7ceptional circumstances for clearing purposes. lowers the cost of collection of che@ues. Che@ue truncation thus ob"iates the need to mo"e the physical instruments across branches.F"er"iew che@ue truncation ser"ice pro"iders rovider ackage CL& &ssociates (mageChe72. Howe"er. date of presentation. C45 is a more secure system "is$a$"is the e7change of physical documents. With the other ma?or products being offered in the form of )4G5 and 9604.olaris 0inancial 4echnology (ntellect Business . C5C Check"ision 8ess 4echnologies 8essC45 8ata 5upport 5ystems 5ierra 4. &s highlighted earlier. etc. thus benefitting the system as a whole.(. the )eser"e Bank has created the capability to enable inter$bank and customer payments online and in near$real time.
Banks.ublic Oey (nfrastructure A.O(B has been implemented in C45. 4his is called the presentation clearing. the collecting bank Apresenting bankB sends the data and captured images duly signed and encrypted to the central processing location AClearing HouseB for onward transmission to the paying bank Adestination or drawee bankB. *& (s it possi+le to +riefly e.an$(ndia and also on choosing the locations for each grid for optimum use of the resources. arri"es at the settlement figure and routes the images and re@uisite data to the drawee banks. 0or the purpose of participation the presenting and drawee banks are pro"ided with an interface D gateway called the Clearing House (nterface ACH(B that enables them to connect and transmit data and images in a secure and safe manner to the Clearing House ACHB. &fter migration of the entire che@ue "olume from M(C) system to C45. and ha"e to meet the specifications and standards prescribed for data and images. core banking or other applicationB which is internal to them. .+. branches and customers based at small D remote locations falling under the ?urisdiction of a grid would be benefitted. the traditional M(C)$based che@ue processing has been discontinued in these two locations. safety and non$repudiation of data D images.-. Oerala. What is the status of C$S implementation in the country? 4he )eser"e Bank has implemented C45 in the 9ational Capital )egion A9C)B. if any.-.uducherry under Chennai Grid in a phased manner )& What is the new approach to C$S implementation in the country? 4he new approach en"isioned as part of the national roll$out is the grid$based approach.. 4he drawee CH(s also generate the return file for unpaid instruments. 4he Clearing House processes the data.plain the entire process flow in C$S? %es... adoption of latest technology. it has been decided to operationalise C45 across the country. has emerged as an important efficiency enhancement initiati"e undertaken by )eser"e Bank in the .rationalisation.. . cost effecti"eness. thus. (t has also been en"isaged to bring all the bank branches in the states of 4amilnadu. irrespecti"e of whether there e7ists at present a formal arrangement for che@ue clearing or otherwise.radesh and the nion 4erritory of .ayments 5ystems area. 4he concept of region wise grids will be replaced and operational freedom will be gi"en to the operator in deciding the number of grids re@uired to e7pand the reach of C45 . Grid based C45 clearing has since been started in in Chennai by including a few banks from Coimbatore and Bengaluru with effect from March . 6ach grid will pro"ide processing and clearing ser"ices to all the banks under its ?urisdiction.--C and 5eptember . the presenting bank Aor its branchB captures the data Aon the M(C) bandB and the images of a che@ue using their Capture 5ystem Acomprising of a scanner. 4he return file D data sent by the drawee banks are processed by the Clearing House in the return
. end$to$end . &ndhra . etc. 9ew 8elhi and Chennai with effect from 0ebruary . C45. (n C45. Oarnataka.. business process re$engineering. &ccordingly. &s part of the re@uirement. 4o ensure security.. 4he drawee banks through their CH(s recei"e the images and data from the Clearing House for payment processing. . nder this approach the entire che@ue "olume in the country cleared across numerous locations will be consolidated into a much fewer number of grids. better ser"ice. Based on the ad"antages realised by the stakeholders and the e7perienced gained from the roll$out in these centres..
gi"en the fact that images of che@ues Aand not the physical che@uesB alone need to mo"e in C45. nder the grid clearing. 4he entire essence of C45 technology lies in the use of images of che@ues Ainstead of the physical che@uesB for payment processing. (ncidentally. greatly reduced. Will there +e any change in the process for the customers? 9o. che@ues drawn on centres included in the grid will be cleared as part of local clearing. Fb"iating the need to mo"e the physical che@ues is e7tremely beneficial in terms of cost and time sa"ings. logos. 4he scope for frauds inherent in paper instruments is. Ff course. thus. C45 brings elegance to the entire acti"ity of che@ue processing and clearing. such as embedded "erifiable features such as bar$codes. Customers continue to use che@ues as at present. 0or reaping this benefit .. Moreo"er. the physical mo"ement of instruments is stopped.
. limitations of the e7isting clearing system in terms of geography or ?urisdiction can be remo"ed. -& What type of che!ues can +e presented for clearing through C$S? &ll types of che@ues can be presented for clearing through C45. who are used to recei"ing the paid instruments Alike go"ernment departmentsB would also recei"e the che@ue images. the time taken for receipt of paid che@ues is reduced which also gi"es an early opportunity to the issuers of che@ues to detect frauds or alterations. 4here is no change in the clearing process for customers. for early interception of altered D forged instruments. What are the +enefits of C$S to customers of +anks? 4he benefits are many. 4he electronic mo"ement of images of che@ues speeds up the process of settlement and can facilitate reduction in the clearing cycles as well. such of those customers.-.-. (t is no different from the use of traditional clearing infrastructure for clearing paper che@ues. the concept of Grid$C45 clearing is being en"isaged as part of roll$out of C45 at Chennai. e7cept to ensure the use of image$friendly$coloured$inks while writing the che@ues. it is possible for the remo"al of the restriction of geographical ?urisdiction normally associated with the paper che@ue clearing.if any. the related 0&Ps may be referred toB. holograms. 4he Corporates if needed can be pro"ided with images of che@ues by their bankers for internal re@uirements. encrypted codes.clearing session in the same way as presentation clearing and return data is pro"ided to the presenting banks for processing. &s only the images mo"e. Che@ues presented as part of 5peed Clearing are handled in C45 as well Afor more details on 5peed Clearing. Che@ues with alterations in material fields Ae7plained in detail laterB are not allowed to be processed under the C45 en"ironment. if any. With the introduction of imaging and truncation. C45 also benefits issuers of che@ues. se of images ob"iates the need to handle and mo"e physical che@ues at different points. in terms of what Aand to whom itB was issued and what Aby whom itB was realised. 4he clearing cycle is treated as complete once the presentation clearing and the associated return clearing sessions are successfully processed. Che@ue frauds can be greatly reduced with introduction of minimum security features prescribed under C45 5tandards . 0urther. thus enabling consolidation and integration of multiple clearing locations managed by different banks with "arying ser"ice le"els into a nation$wide standard clearing system with uniform processes and practices. there is no fear of loss of instruments in transit. etc. watermarks.
years. &s the payments are made on the basis of the images. C45 in (ndia uses a combination of Gray 5cale and Black L White images.. banks can pro"ide images of che@ues duly authenticated. 4he solution encompasses (mage Puality &ssessment A(P&B at different le"els.-! prescribes certain mandatory and optional security features to be a"ailable on che@ues. 0urther (P& is done at the gateway before onward transmission to clearing house. 4he presenting bank is re@uired to perform the (P& during the capture itself. front Black L White and back Black L White. 4o meet legal re@uirements. it would need to be sourced from the presenting bank. can ask for the physical instrument to facilitate payment processing. 0urther. there is a rigorous @uality check process at the le"el of the Capture 5ystems and the Clearing House (nterface Aof the presenting bankB. howe"er. 4he images are captured with digital signatures of the presenting bank and thereafter transmitted to the Clearing House and then to the paying banks. if not satisfied with the image @uality or for any other reason. the new che@ue standard !C45$. 4hese ha"e their associated ad"antages and disad"antages. &n element of cost D charge may also be in"ol"ed for the purpose.4he benefits from C45 could be summariKed as follows Q 5horter clearing cycle 5uperior "erification and reconciliation process 9o geographical restrictions as to ?urisdiction Fperational efficiency for banks and customers alike )eduction in operational risk and risks associated with paper clearing . Gray 5cale images are mid$way. 4o ensure only images of re@uisite @uality mo"e in the C45 processing cycle. it is essential to ensure the @uality of the images. (n case. Gray 5cale or Coloured.-.& (f a customer desires to see the physical che!ue issued +y him for any reason/ what are the options availa+le? nder C45 the physical che@ues are retained at the presenting bank le"el and do not mo"e to the paying banks. the paying banks. which will also add to the uni@ueness of the images. 4he che@ue images can be Black L White. (mages that do not meet the specifications are re?ected.t ? (maging of che@ues can be based on "arious technology options. but do not re"eal all the subtle features that are there in the che@ues. for which a re@uest should be made to hisDher bank. 4here are three images of each che@ues that need to be taken $ front Gray 5cale. %0& How would +e the uni!ueness of a physical che!ue +e captured and imparted to the che!ue image ? C45 in (ndia mandates the use of prescribed image specifications only. Black L White images are light in terms of image$siKe. %'& How are the images of che!ues taken ?
. a customer desires to see D get the physical che@ue. %%& What are the image specifications in C$S in the (ndian conte. Coloured images are ideal but increase storage and network bandwidth re@uirements. the presenting banks which truncate the che@ues need to preser"e the physical instruments for a period of . 0urther. (n case a customer desires.
ha"e been ad"ised to issue only *C45$. alterations. F"er a period of time. the che@ues issued are tested and certified by 9. gray$scale or colour based on how the pi7els are con"erted into digital "alues. non$repudiation and authenticity of the data and image transmitted from the paying bank to the payee bank are ensured using the . bankEs logo in in"isible ink. . & Working Group was set$up by )B( for e7amining further standardisation of che@ue forms and enhancement of security features therein. 4he benchmark prescriptions are collecti"ely known as C$S-'0%0 standard!. was one of the key factors that enabled mechanisation of che@ue processing. watermark. (n the case of black and white images. )eflectance measurements of each dot is called a pi7el. introduction of Che@ue 4runcation 5ystem AC45B.O( is used throughout the entire cycle co"ering capture system. & black and white image is also called a binary image. on priority basis in northern and southern region which will be part of the northern and
.C( and only after such cerification the che@ues would be issued to the customers. etc. (mages are classified as black and white.ayments Corporation of (ndia A9. @uality of paper. . depending on the colour of the source. 4he homogeneity in security features is e7pected to act as a deterrent against che@ue frauds.O( standards used are in accordance with the appropriate (ndian acts and notifications of Controller of Certifying &uthority ACC&B %)& What is Che!ue Standardisation and what does C$S '0%0 Standard mean ? 5tandardisation of che@ue forms Alea"esB in terms of siKe.ublic Oey (nfrastructure A. issued and handled by banks and customers uniformly across the banking industry. the presenting bank. etc. etc. Growing use of multi$city and payable$at$par che@ues for handling of che@ues at any branches of a bank. &ll banks pro"iding che@ue facility to their customers.---. while the standardisation of field placements on che@ue forms would enable straight$through$processing by use of optical D image character recognition technology. were a few aspects that led to prescription of certain minimum security features in che@ues printed.-.-* standard che@ues not later than &pril .(mages of che@ues are taken using scanners. 4he set of minimum security features would not only ensure uniformity across all che@ue forms issued by banks in the country but also help presenting banks while scrutinising D recognising che@ues of drawee banks in an image$ based processing scenario. certain benchmarks towards achie"ing standardisation of che@ues issued by banks across the country ha"e been prescribed like Q @uality of paper. lighter or darker. etc. branding. identification... tampering.C(B are co$ordinating with the banks on implementation of the new standard.-. (ndian Banks &ssociation A(B&B and 9ational . . M(C) band. (n addition. banks ha"e added a "ariety of patterns and design of che@ue forms to aid segmentation. the clearing house and the drawee bank...O(B. 4he . and standardisation of field placements on che@ues. 0or getting a gray scale image the pi7els are mapped onto a range of gray shades between black and white.. 5canners also function like photo$copiers by reflecting the light passed through a narrow passage on to the document. C45 is compliant to the re@uirements of the (4 &ct. &ccordingly. 4iny sensors measure the reflection from each point along the strip of light. 4he entire image of the original document gets mapped as some shade of gray. (t has been made mandatory for the presenting bank to sign the images and data from the point of origin itself. certain desirable features ha"e also been suggested to be implemented by banks based on their need and risk perception. "oid pantograph. integrity. increasing popularity of 5peed Clearing. &ccordingly. etc. as also incorporated therein a number of security features to reduce the incidence of che@ue misuse.. %1& How the image and data transmitted over the network is secured ? 4he security. such mapping is made only to two colours based on the range of "alues of contrasts.
%4& (s the infrastructure re!uirement for participating the C$S the same for all +anks ? 4he infrastructure re@uired at the banksE end for participating in C45 are dedicated connecti"ity from the bankEs gateway to the Clearing House. Customers may re@uestDinsist their banks for che@ue forms that are compliant with the !C45 .-! che@ues which are not only image friendly but also ha"e more security features. database and a bou@uet of third party software for the CH(..-! standard.. 9o changes D corrections can be carried out on the che@ues Aother than for date "alidation purposes. %3& What are the modes in which +anks can participate in C$S ? 4here are two modes in which banks may participate in C45 Q 8irect membership> Banks may participate as direct member pro"ided they ha"e a settlement account with the settlement bank and ha"e put in place necessary infrastructure for participating in C45. 0or any change in the payeeEs name.
. %*& What is the prescription relating to alterations 2 corrections on che!ue forms ? 4he prescription on prohibiting alterations D corrections on che@ues has been introduced to curtail che@ue frauds on account of alterations in the "arious fields of che@ues and to gi"e protection to customers as well as banks.referably. payeeEs name.3 abo"e. so that it does not interfere with the material portions such as date. 4hey also need to procure the application software for their capture systems. . should not o"ershadow the clear appearance of these basic features in image. Banks should e7ercise care while stamping the che@ue forms. amount and signature.-. (ndirect D 5ub$membership> Banks may become sub$members D indirect members of the direct members by using the infrastructure and D or settlement ser"ices of the direct members.-.-. )B( pro"ides member banks with the CH( AsoftwareB. if re@uiredB. courtesy amount Aamount in figuresB or legal amount Aamount in wordsB. . 4his would help banks in identifying and controlling fraudulent alterations. a new che@ue leaf may be used in the e"ent of any alterations D corrections as the che@ue may be cleared through image based clearing system as enumerated in . etc. What are the precautions re!uired to +e taken +y the +anks 2 customers to avoid frauds Banks D Customers should use !C45 . prescribed hardware and software for the C45 application. 4his prohibition is applicable to che@ues cleared under the image based Che@ue 4runcation 5ystem AC45B only and is effecti"e from 8ecember . 4hey should preferably use dark coloured ink while writing che@ues and a"oid any alterations D corrections thereon. 4he settlement for such indirect D sub$member could be done either directly Aif such banks ha"e settlement accounts with the settlement bankB or through the direct member through whom they are participating.-. through a time bound action plan.-. (t is not applicable to che@ues cleared under other clearing arrangements for the present. fresh che@ue lea"es should be used by customers. Banks need to procure hardware and other software such as operating system. (t is necessary to ensure that all essential elements of a che@ue are captured in an image during the scanning process and banks D customers ha"e to e7ercise appropriate care in this regard.southern C45 grids respecti"ely and across the country by 5eptember 2-. 4he use of rubber stamps. .
future re@uirements ha"e been taken into consideration while calculating the bandwidth re@uirement. Bandra$Ourla Comple7. 4ower .Systems +ecause the +ank wants to know if you're a check +ouncer or have cheated a +ank in some way& Che75ystems is somewhat akin to the credit information bureaus. 0inancial institutions report indi"iduals who !mishandle checking and sa"ings accounts. <th 0loor.! (f your name winds up in the Che75ystems database. & to the 9egotiable (nstruments &ct. Mumbai$+-. Nee"an Bharati Building. %. etc. a"erage siKe of an image.--. fees and more fees Chapter +> .ersons are Q 4he General Manager. coupled with the introduction of C.& Whether the Che!ue $runcation System has legal sanction? With amendments in the 5ections 1 and . '0& (n case of need for any further clarifications/ who can +e approached for guidance ? 0or any further clarifications the Contact . 9ational Clearing Cell. C$:. you could find it e7tremely difficult to open a bank account for @uite a
.4he hardware re@uirement D siKing is based on the "olume of che@ues processed by banks. Based on the "olume the CH( is categorised into four types and the hardware re@uirement is different for each category.. )B( .CC. 9ew 8elhi Q .rotecting your account
When you apply to open a checking account/ there's a good chance the +ank will run your name through Che. Bandra A6astB.Cth 0loor.ayment Corporation of (ndia. 4he bandwidth re@uirement for each bank is calculated based a number of factors like the peak inward and outward "olume of the bank...
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Chapter . (n addition.A+B. 9ational . 4he Chief 67ecuti"e Ffficer. Connaught .> &BCs of &4Ms Chapter 2> 0ees.> 4ypes of checking accounts Chapter . .. efficiency factor of the network..-3..Systems
By Bankrate.remises. )eser"e Bank of (ndia.lace. truncation of che@ues is now legaliKed.
Why -. 4ips for staying out of the Che75ystems database> • 8on*t write checks without ha"ing money in the account to co"er them.+anks use Che. Before closing a checking account. (n reality. 0or all its clout.while.Systems
0inancial institutions lose billions of dollars e"ery year because of check fraud and abuse. all automatic debits ha"e stopped and you ha"e paid all fees. weeding out not only checking account applicants who intend to commit fraud but also law$abiding people who wrote a bad check or two by mistake. si7$hour class checking$account school where check bouncers learn the basics of owning a checking account and managing financial responsibility. 4he registration fee "aries around the country. Many people who end up in the database don*t learn of it until they try to open a checking account and are turned down. contact Che75ystems to dispute the entry. banks and credit unions belong to the Che75ystems network. which is why C.
Oeep track of your balance and reconcile your checkbook with the bank*s statement as soon as you recei"e it. you*ll most likely wind up there. • 0ind out from the bank or credit union how long it takes for deposits to be credited to your account. but e7pect to pay somewhere
. Get Checking classes are usually run by consumer credit counseling agencies and uni"ersity e7tension programs. make sure all checks ha"e cleared. Che75ystems wields its power @uietly.and how -.eople who pass the test at the end of the course are able to open a checking account at a participating bank.5.
(f you are reported to Che75ystems and you think there*s been an error. & program called Get Checking is a one$day.
(f you*"e been shut out of ha"ing a checking account $$ and your situation has nothing to do with fraud $$ you may be able to take a remedial class of sorts and get a new checking account in less than fi"e years. . or go online and check it. but if your account is closed because it*s o"erdrawn. 5ome critics complain that financial institutions use Che75ystems indiscriminately. or who were irresponsible with their accounts but ha"e since learned their lesson. bouncing a check or two isn*t likely to earn you a file in Che75ystems. & negati"e Che75ystems report stays in the database for fi"e years and can doom your chance of getting a checking account for that period.percent of .
in the range of R23 to R3-.
. you*ll ha"e to show proof that it*s been repaid before you can get your certificate. (f you owe money to a financial institution due to bounced checks.