Cheque truncation system (CTS) is an image-based cheque-clearing framework. The semi-manual process has certain limitations and takes up to three working days to clear an inter-bank national cheque. Faced with the limitations of this system, cheque users and commercial banks need an efficient and secure system which can clear a cheque within less than 24 hours along with providing integrity and confidentiality to the system. All banks intending towards participating in this framework must connect towards the proposed blockchain-based system. A comprehensive framework among four primary phases—(1) paper check clearing process, (2) digital check issuing and clearing process, (3) check fraud detection process, and (4) check transaction security procedure—was presented as a solution.
TopIntroduction
Technology development has significantly changed every sector, including the financial, industrial, educational, and administrative ones. The banking industry has developed rapidly and kept up with these technological changes. The banking industry underwent a significant transition in the late 1980s or early 1990s. Electronic clearing system (ECS) and card-based payment systems were launched during this decade, allowing for the electronic movement of funds between bank accounts. Real Time Gross Clearance (RTGS) and NEFT (National Electronic Funds Transfer) were also incorporated into the banking sector in later decades. Due to the high volume of transactions for these products, the financial institutions have implemented the cheque truncation system (CTS).
Cheques (PaissaBazaar, 2023) are electronically transferred to the drawer's bank (scanned images of the cheques). The time it takes to clear checks is shortened by this method. In their discussion of numerous methods of forgery in digital cheques, mention replacing a duplicate signature of any individual and altering the precision of the cheque amount using digital image processing techniques (Ghandali and Moghaddam, 2009). To detect any check fraud, Rajender and Pal (2014) suggest a digital watermarking-based technique. The e-cheque framework's architecture is suggested by Anderson (1998). An electronic cheque system based on mutual drawer and payee authentication is proposed by Chang et al. Researchers are becoming more interested in blockchain-based major e-governance applications like the blockchain-based property transaction system.
The blockchain stores every transaction as a chain of interconnected blocks. The immutable characteristic of the blockchain is attributed to each block's unique header, which is computed cryptographically and commits to the header of the previous block.
Figure 1 shows how cheque will be created and how it broadcast in all nodes, how it validates and how block will be added to blockchain.
To ensure the validity of the data being incorporated into the blocks, a transaction must be approved by the network's active members before it is committed to the ledger. The distributed ledger consensus procedures (Singh et al., 2021) play a key role in deciding which database state is chosen to be valid and true at this point. The new transaction is only added to the block and connected to an existing transaction once consensus has been reached.
Cheques are one of the reports that banks utilise most regularly and where duplication occurs most frequently. The most common non-cash payment method, valued 96.8 billion USD in 2018 (Anderson, 1998), is checks. To clear a check, a lot of time and work are required. The current check clearing process is semi-manual (Abd-ElZaher, 2014).