CTS – Process Flow for PDC’s (Post Dated Cheques)
PDC’s are an integral part of the Indian Banking system. It is observed in spite of ECS (Debit), being popular, the rise of PDC’s is on the increase.
What is a Post Dated Cheque ?
· A cheque with a future date entered.
· The cheque cannot be cashed until that date is reached.
What could be the reason for the same?
The following could be some of the answers for the rise of PDC’s.
01) To set up a ECS Debit Mandate, the processing time is 7-14 days. This means a loan cannot be disbursed till the ECS Debit Mandate is in place. Usually the borrowers are not inclined to wait 7-14 days, to receive the Loan Proceeds. Hence, they prefer to issue PDC’s for the Loan Tenure.
02) Now-a-days, majority of the Retail Loans (i.e Auto, Personal, Home) are hawked by DSA’s (Direct Sales Agents). And, DSA’s achieve their target only when the Loans are actually disbursed. Hence, they too are comfortable with PDC’s only.
03) Speed clearing has picked up at major Metros, at least for Private sector bank Branches. This aids in quick processing of cheques drawn on remote branch locations too.
04) And, for Check Bounce cases, the RETURN MEMO is of paramount importance, to pursue for recovery of the Loan dues.
Therefore cheques as a mode of settlement of Loan’s will continue to be the preferred mode of repayment.
Handling of PDC’s under the CTS scenario will : -
/ be simplified
// be accurate
/// lead to reduction of the TAT.
Present Scenario: -
· Collect the PDC’s of all the Bank Borrower accounts – the pooling location depends on the Individual banks, whether centralized or de-centralized or hub and spoke model etc.
· Segregate the PDC’s month-wise at the pooling location.
· Present the PDC’s on the respective dates. The actual work commences in the background, at least 2 weeks prior to the Presentation date.
It is observed that the common date for PDC’s is the 7th of every month. As a matter of convenience, Banks tend to present the cheques from 7th to 10th of the month, in order to avoid clubbing of all bank’s PDC’s on a single date.
Process the Returns, and affect the credits.
Proposed Scenario under CTS:
· The PDC’s are scanned and converted into CTS ready images.
· CTS Batches are created according to the Presentation date.
· Once the CTS batches are created as per the Presentation date, no further processing is required till a couple of days before the actual presentation date.
· On the presentation date, the CTS Batches are presented as part of the CTS cycle.
· Process the Returns, and affect the credits.
· The only hitch will be the removal of the CTS Images in case there is a request for non-presentation of any particular cheque. This also is not a major issue, as in the present scenario too; there are requests for non-presentation of a particular cheque, for a particular PDC cycle.
· The most significant feature here is the menace of closed accounts. Removing cheques of closed accounts in a physical PDC cycle is tedious and time-consuming. But in case of CTS, a simple action will remove the CTS Images of the closed accounts instantly.
Even if the CTS images are not removed from the CTS Cycle, the automated CTS processing system will eliminate them in the first instance itself.
In the above scenario, there will be major benefits in
01)Transportation cost of the PDC’s from one location to another location.
02) Storage cost, as all physical PDC’s can be stored at a single pan Indian location, instead of multiple locations.
03) Retrieval of a physical PDC will be smoother, as all PDC’s will be at a single location only.
