BANKING AFFAIRS

Detailed explanation-1: -(b) “a truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.

Detailed explanation-2: -What is Cheque Truncation? Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch.

Detailed explanation-3: -(5) “Truncated account” means a checking, negotiable order of withdrawal, or similar deposit account for which the original checks drawn on the account are not returned to the customer on a regular basis.

Detailed explanation-4: -What is the difference between Cheque Truncation and an Electronic Cheque? Cheque truncation and electric cheques are two different things. In cheque truncation the physical movement of a paper cheque issued stops and electronic flow begins while the electronic cheque is issued electronically and no paper is involved.

Detailed explanation-5: -Step 1: First, an electronic image of the cheque is captured by the presenting bank (collecting bank) through a ‘Capture System’ Step 2: The presenting bank then sends this data in an encrypted format to the ‘Clearing House’, from where it will be sent to the paying bank.