Sunday, December 16, 2012

Negotiable instrument

Negotiable instrument
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. Negotiable instruments are often defined in legislation. For example, according to the Section 13 of the Negotiable Instruments Act, 1881 in India

Types of Negotiable instrument
A negotiable instrument is a promissory note, bill of exchange or cheque payable either to order or to bearer. Cheque also includes demand draft 

In other words it is a document contemplated by a contract, which (1) warrants the payment of money, the promise of or order for conveyance of which is unconditional; (2) specifies or describes the payee, who is designated on and memorialized by the instrument; and (3) is capable of change through transfer by valid negotiation of the instrument.

Friday, December 7, 2012

CTS-2010 Standard for Cheque

"CTS-2010 Standard" for Cheque Forms – Specifications
1. Mandatory features on CTS 2010 Cheque

1.1 Paper (At Manufacturing Stage) : Status quo shall be maintained in relation to paper specifications as it exists currently. Details of current specifications are
contained in the document 'Mechanised cheque processing using MICR technology - Procedural Guidelines', available at -, paper should be image friendly and have protection against alterations by having chemical sensitivity to acids, alkalis, bleaches and solvents giving a visible result after a fraudulent attack. CTS-2010 Standard paper should not glow under Ultra-Violet (UV) light i.e., it should be UV dull. This shall ensure that the feel of cheques is uniform across banks.

1.2 Watermark (At Manufacturing Stage) : All cheques shall carry a standardised watermark, with the words “CTS-INDIA” which can be seen when held against any light source. This would make it difficult for any fraudster to photocopy or print an instrument since this paper would be available only to security printers handling cheque printing. The watermark should be oval in shape and diameter could be 2.6 to 3.0 cms. Each cheque must hold atleast one full watermark. Sample watermarks that would be used in CTS will be finalised in consultation with Indian Banks’ Association (IBA) / National Payments Corporation of India (NPCI) and could (illustratively) appear as under -

1.3 VOID pantograph (At Printing Stage): Pantograph with hidden / embedded “COPY” or “VOID” feature shall be included in the cheques. This feature should not be visible on the scanned image at the resolution specified in CTS but should be clearly visible in photocopies and scanned colour images as resolution used in such cases would be above the prescribed CTS standards. This would act as a deterrent against colour photocopy or scanned colour images of a cheque.

1.4 Bank’s logo printed with invisible ink (ultra-violet ink) (At Printing Stage) : Bank’s logo shall be printed in ultra-violet (UV) ink. The logo will be captured by / visible in UV-enabled scanners / lamps. It will establish genuineness of a cheque.

1.5 Field placements of a cheque : Placement of significant fields on the cheque forms shall be mandated. However, placement of additional fields shall be left to banks. This will enable data capturing by Optical / Image Character Recognition (OCR / ICR) engines in offline mode and help banks in automating their payment processes. A sample cheque with recommended field placements is placed at 4 below.

2. Desirable features
2.1 In addition to the mandatory security features as above, banks can consider including additional security features as per their risk perception like (i) supplementary watermark containing their own logo, (ii) embedded fluorescent fibres, (iii) fugitive ink, (iv) secondary fluorescent ink, (v) micro-lettering, (vi) toner fusing, (vii) check-sum, (viii) patterns, (ix) floral designs, (x) bleeding ink, (xi) structural magnetics, (xii) security thread, (xiii) hot stamped holograms on multi-city cheques and demand drafts, (xiv) auto-detection tools, (xv) use of UV band on sensitive and key areas of interest on a cheque such as Legal Amount Recognition (Amount in Words), Courtesy Amount Recognition (Amount in Figures), Signature, Beneficiary Name, (xvi) pre-encoding of amount field on the MICR band for demand drafts / pay orders (above a self-decided cut-off) before issue to customers, (xvii) use of check-sum on the face of demand drafts / pay orders (other than the MICR band), etc.

What is CTS 2010 ?  Sample of CTS 2010 Cheque:

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