Your Cheques Will Be Invalid From January 1, 2019, IF it is a non CTS cheque. CTS is the abbreviated form of Cheque Truncation System and the Reserve Bank of India had issued a new guideline about CTS cheques July 2018. As per the RBI guideline, non-CTS cheque will become invalid from 1 January. and State Bank of India (SBI) customers will not be able to use non-CTS cheques from December 12 .
Earlier the banks would present physical cheques to the banks when a customer would present a another bank cheque for cash. CTS stops the flow of physical cheque and an electronic image of the instrument is presented for clearing which saves a lot of time unlike the physical presentation of the cheque.
So henceforth from January 1 customers will not be able to get payments from cheques of non-CTS cheques of any bank.
The RBI 'Procedural Guidelines For Cheque Truncation System', which was published in July 2018, explains that the previous MICR cheque clearing system required the cheques to be physically moved from one place to another and the time involved in their processing at various intermediate stages increases the length of the clearing cycle of cheques. The restrictions were due to the Negotiable Instruments Act, 1881 which mandated the presentation of the cheque to the drawee branch for payment. RBI with suitable amendments to The Negotiable Instruments (NI) Act, 1881, The Information Technology (IT) Act, 2000 and The Bankers’ Book Evidence (BBE) Act, 1891 has created a legal framework which has been put in place for the introduction of cheque truncation and e-cheques in India.
The law was amended in 2002, which paved the way for presenting electronic images of the cheques in place of the physical instrument. The RBI has given sufficient time for all Banks and its customers including State Bank of India (SBI), HDFC Bank, ICICI Bank, Bank of Baroda, Punjab National Bank and others using Non-CTS cheques to migrate to the new form CTS making non CTS cheques invalid from January , 2018.