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Electronic Cheque (E-cheque) and Truncated Cheque in India

Meaning and Definition of Electronic Cheque

Section 6 of the Negotiable Instruments Act, 1881 (26 of 1881) defines "a cheque in the electronic form" means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature, as the case may be.

Meaning and Definition of Truncated Cheque

Section 6 of the Negotiable Instruments Act, 1881 (26 of 1881) defines “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.

P.S. The definition of Electronic cheque and Truncated cheque was inserted in section 6 by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, which was further amended by the Negotiable Instruments (Amendment) Act, 2015.

The Information Technology Act - Applicability on E-Cheque & Truncated Cheque

As per Section 81-A of the IT Act, The provisions of this Act, for the time being in force, shall apply to, or in relation to, electronic cheques and the truncated cheques subject to such modifications and amendments as may be necessary for carrying out the purposes of the Negotiable Instruments Act, 1881 (26 of 1881) by the Central Government, in consultation with the Reserve Bank of India, by notification in the Official Gazette.

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