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Banks have an ‘image’ problem

india Updated: Dec 05, 2009 21:58 IST

Have any of your cheques been returned or dishonoured by your banker in recent times on grounds of ‘signature not tallying?’ Well, most likely, the problem is not your signature, but a glitch in the Cheque Truncation System(CTS) adopted by banks for faster cheque clearance.

For the uninitiated, let me explain in brief what the CTS is all about. While earlier, cheque clearance involved the movement of the actual cheques from the presenting bank to the drawee bank, under CTS, it is the virtual cheque or the image of the cheque captured by the presenting bank that moves through various steps in the cheque clearing cycle.

Since the payment is made on the basis of the images and the electronic data, it is imperative that banks ensure absolute clarity in respect of the images captured on the computer. Failure on this front results in return of the cheques.

For this reason, RBI has specified quality parameters for the images and also quality audit at two stages before the transmission of the data to the clearing house. Obviously, banks are not following these stringently.

There is another problem- under the CTS: the computer compares the signature on the cheque with the specimen signature captured by the bank. Signatures undergo changes over the years and if the specimen signature is very old, there is every possibility of the signatures not tallying. Banks therefore have to update the signatures of their customers, where needed, but this is hardly done. Customer education about writing the cheque in the new regime is also lacking.

Whenever customers confront the banks about the return of the cheques, the banks give a certificate saying that the cheque was dishonoured on account of ‘technical problem’! But that is hardly a solution, when such return could adversely affect renewal of insurance policies, or credit card payments or installments towards loans.

For want of space, I will be answering only one question on the issue and I do hope this will satisfy others who have sent queries on the subject. Ms Prem Latha from Janakpuri writes: On 7th October, 2009, I issued a cheque for Rs 1,72,940/- towards an installment for a flat and personally requested the bank to ensure that it is cleared without delay as I would be entitled to a 5 per cent discount, amounting to Rs 8,040 for payment made before October 23. Yet, the cheque was returned to the builder with the remark, “signature not tallying”. Later, I found out that the image of my signature had got blocked while scanning, resulting in the rejection of my cheque. On my request, the bank gave a certificate saying that “ the cheque has been returned due to technical reasons in the system and not for want of funds.” But the builder not only collected Rs 8,040, but also Rs 500 towards the bounced cheque. I am now asking the bank to pay me Rs 8,540, but the bank is silent. What are my options?

This is a clear case of negligence and the bank must make good your loss. Please file a complaint before the Banking Ombudsman. You can approach the consumer courts too, but the process would be quicker before the Ombudsman.