Banky’s Understanding: CTS: Introduced Feb 2008. Truncation = stopping physical cheque flow, transmitting electronic image to paying bank via clearing house. Legal backing: NI Act (Sec 6), IT Act, BBE Act (amended 2002). MICR-based clearing discontinued. Only banks/clearing house can truncate (NOT drawer/holder). Paper cheque stays with truncating bank. Digital signature optional. Grid-based clearing (all India covered).

Banky’s Understanding: CTS 2010 Standards: Mandatory features for cheques: (1) Field placement as prescribed, (2) Watermark, (3) Security thread, (4) Void pantograph. ⚠️ Pre-filled account field is NOT mandatory (exam PYQ!). Customers must use CTS 2010 compliant instruments. Use image-friendly ink. Write clearly. No alterations (use fresh cheque). Don’t write in MICR band area. 3 images captured per cheque (exam PYQ!).

Banky’s Understanding: Positive Pay System (PPS): Introduced Jan 1, 2021. Issuer of cheque submits key details electronically (SMS, app, net banking, ATM) to drawee bank: date, beneficiary name, amount. Cross-checked with presented cheque at clearing. Discrepancy flagged. Available for cheques ₹50,000+. Customer’s discretion to use. Banks can make mandatory for ₹5,00,000+. Only PPS-compliant cheques accepted under dispute resolution. Managed by NPCI.

Banky’s Understanding: Cheque Collection Policy (CCP): Banks must formulate transparent policy covering: (a) Immediate credit for local/outstation cheques, (b) Timeframe for collection, (c) Interest/compensation for delays. ⚠️ No compensation for delay in local cheques — exam PYQ trick! (answer says this is NOT acceptable in CCP — banks MUST compensate even for local delays). If no rate specified: compensate at SB interest rate. Protect interests of small depositors. Integrated with deposit policy.

Banky’s Understanding: Dual custody: ALL cash at branch must be under joint custody (cashier + accounts manager/supervisor). Exception: Cashier’s hand balance — NOT required to be under dual custody (exam PYQ!). Notes <₹100 denomination also under dual custody. Coins also under dual custody. Strong room cash: dual lock + dual key. Cash remittances: security measures, blanket insurance policy, escort arrangements.

Banky’s Understanding: Counterfeit notes procedure: (1) IMPOUND — NEVER return to customer or destroy. (2) Stamp ‘COUNTERFEIT NOTE’. (3) Issue acknowledgement receipt (even if customer refuses to sign). (4) Record in separate register under authentication. (5) Keep in joint custody, segregated from genuine notes. (6) Police report: ≤4 pieces = monthly consolidated report. ≥5 pieces = immediate FIR. Copy to Forged Note Vigilance Cell at HO. No credit to customer for counterfeit notes.

Banky’s Understanding: Soiled/mutilated/defective notes: Can be exchanged from any bank branch on all working days. Banks cannot refuse. RBI guidelines on note refund rules apply. Distinction: soiled (dirty/worn but intact) vs mutilated (torn/missing parts). Exchange rules based on area of note intact. Currency chest branches handle bulk exchange.

Banky’s Understanding: ATM cash replenishment: Critical for customer service. Operational risks: security, accuracy, cash balance management. Security policy must cover: screening of staff/agencies, rotation of personnel, monitoring measures, internal control systems. Banks cannot restrict counter deposits to force ATM-only deposits (RBI has advised against this unfair practice). Cash remittances between branches: insured, escorted, documented.