Have you noticed how cheque-related questions in banking exams have evolved over the years? Earlier, questions focused on basic definitions such as what is a cheque or who is a drawer. Today, examiners expect clarity on systems, timelines, fraud controls, and legal priorities.
This video and article address that shift. It explains how cheques function in the modern digital banking ecosystem, starting from electronic cheques and truncated cheques, moving to the Positive Pay System, and finally covering continuous clearing and same-day settlement under CTS.
The session also covers the legal side of banking operations—garnishee orders and attachment orders. These topics are critical for promotion exams, JAIIB/CAIIB, and day-to-day compliance handling in branches.
This content is especially useful for bank officers, clerks, promotion aspirants, branch managers, and operations staff. Watch the video carefully and share your doubts or real-life cases in the comments for deeper understanding.
Before we dive in, watch this video for a complete breakdown:
What Is an Electronic Cheque?
An electronic cheque (e-cheque) is a cheque that is created digitally. Unlike traditional cheques, it is not handwritten. Both creation and signing happen electronically using a digital or electronic signature.
Biometric authentication or mandatory public key infrastructure is not compulsory. The key requirement is digital creation and authentication, which makes the cheque legally valid.
From an exam point of view, remember clearly:
- Electronic cheque refers to digital creation and signing
- It does not define the clearing mechanism
Understanding Truncated Cheques under CTS
A truncated cheque refers to the clearing process, not creation. Under the Cheque Truncation System (CTS), the physical movement of the cheque stops at the presenting bank.
Only the electronic image and data are sent to the clearing house and drawee bank. The physical cheque does not travel further.
Benefits of CTS include:
- Faster clearing
- Lower fraud risk
- Reduced operational cost
- Improved audit trail
Exam tip: Electronic cheque = creation, Truncated cheque = transmission.
Parties to a Cheque
Every cheque transaction involves three compulsory parties:
- Drawer – Account holder issuing the cheque
- Drawee – Always a bank
- Payee – Person receiving payment
These basics form the foundation of advanced case-based questions.
Positive Pay System – Fraud Prevention
The Positive Pay System was introduced to control cheque fraud, especially in high-value transactions.
Mandatory threshold: Cheques of ₹5,00,000 and above
Customers must submit the following details before cheque presentation:
- Cheque number
- Cheque date
- Cheque amount
- Payee name
- Account number
When the cheque is presented, the bank verifies these details. Matching details lead to payment; mismatch leads to return.
Continuous Clearing and Same-Day Settlement under CTS
CTS has moved from batch-based clearing to continuous clearing.
- Clearing window: 10:00 AM to 4:00 PM
- Drawee bank response time: 3 hours
- No response: Deemed approval
Once approval is received, settlement is triggered immediately. The presenting bank should credit the customer within approximately one hour.
Garnishee Order – Recovery of Private Dues
A garnishee order is issued by a court for recovery of private liabilities.
Three parties are involved:
- Judgment Creditor
- Judgment Debtor (Customer)
- Garnishee (Bank)
The order is issued in two stages:
- Order Nisi – Show-cause notice
- Order Absolute – Final payment direction
Only the credit balance available at the time of receipt can be attached. Future credits are not affected.
Limitation period: 12 years
Companies Act, 2013 – Comprehensive Guide for Bank Promotion Examinations
Attachment Order – Recovery of Government Dues
Attachment orders are issued by statutory authorities for recovery of government dues.
Key features:
- Single-stage absolute order
- Amount always specified
- Applicable to existing and future credits
- Limitation period: 30 years
Priority of Claims
- Bank’s Right of Set-Off
- Attachment Order
- Garnishee Order
Conclusion
This article integrates banking technology, operations, and legal recovery mechanisms in an exam-oriented manner. Understanding limits, timelines, and priority rules is critical for scoring well in modern banking exams.
Focus on application, not memorization. Observe real branch scenarios and relate them to these rules. Share questions and experiences in comments and continue exploring related banking law and operations content for consistent improvement.
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