CCSR Implementation Mastery: 15 Case Study MCQs on Realisation Settlement
CCSR Implementation Guide
15 Case Study Based MCQs on Continuous Clearing & Settlement on Realisation
15 Case Study Based MCQs with Explanations on CCSR
Case 1: Phase 1 Deadline Missed
1. A cheque is presented by Bank A on October 5, 2025, during Phase 1 of CCSR implementation. Due to a technical error, the drawee bank (Bank B) fails to provide a positive or negative confirmation status for this instrument. What is the consequence of this failure?
A) The instrument will automatically be carried forward to the next business day for manual processing.
B) Bank B must apply for a day extension from the Reserve Bank of India.
C) The instrument will be returned to Bank A with a technical return code.
D) The instrument will be deemed approved and included for settlement at 7:00 PM.
Explanation: During Phase 1 (October 4, 2025, to January 2, 2026), the Item Expiry Time for all cheques is set to 7:00 PM. If the drawee bank does not confirm the status (positively/negatively) by this time, the instrument is deemed approved and included for settlement.
Case 2: Post-Phase 2 Processing Time
2. On January 10, 2026 (Phase 2), a State Level RCC receives an inward cheque image from the clearing house at 10:45 AM. What is the latest time the RCC must submit the response (pass/return) to NPCI before the instrument is treated as "deemed approved"?
A) 1:00 PM
B) 1:45 PM
C) 7:00 PM
D) 4:00 PM
Explanation: In Phase 2 (starting January 3, 2026), the item expiry time is changed to T+3 clear hours. Since the instrument was received by the drawee bank (RCC) at 10:45 AM, the processing window is 3 hours, meaning the deadline is 1:45 PM. If confirmation is not provided within this prescribed 3 hours, the instrument is treated as deemed approved.
Case 3: Special Clearing Error
3. On October 3, 2025, a branch mistakenly uses Clearing Type "01" and Session Number "99" for presenting instruments during the Special Clearing Presentation Session. What will be the outcome for these instruments?
A) They will be processed normally but settled only on October 4, 2025.
B) The National Grid Chennai will automatically correct the clearing type to "99."
C) The instruments will not be considered under the Special Clearing session.
D) They will be treated as an operational exception requiring Level 2 escalation.
Explanation: For the Special Clearing on October 3, 2025, banks were advised to strictly use Clearing Type "99" and Session Number "21" for presentation. Instruments presented with any other clearing type/session number will not be attached to the special clearing session.
Case 4: Outward Cheque Lodgment Accounting
4. A customer deposits a cheque for Rs 5,00,000 at the branch counter on October 4, 2025. The branch official lodges the details in the CBS menu (OWCLG) and scans the cheque in the CTS application. What general ledger (GL) accounting entry is made at the branch level at this time?
A) Customer Account is Credited, Intermediate Clearing Account (317119I) is Debited.
B) Settlement Account is Debited, Balance with Other Offices Account (3211201) is Credited.
C) Customer Account is Credited, CBS Suspense Account is Debited.
D) No accounting entry will be done at the branch level.
Explanation: As per the accounting procedures, for outward clearing, the branch will only lodge the instruments in CBS and CTS, and no accounting will be done at the branch level.
Case 5: Escalation for Technical Failure
5. At 2:30 PM, a State Level RCC experiences a critical failure in the CBS-CTS interface, preventing the upload of the host file containing instrument status, potentially impacting the 3:00 PM hourly settlement cycle. The RCC team leader cannot resolve the issue within 30 minutes. What is the next mandatory action, as per the SOP?
A) Wait until the end of the confirmation session (7:00 PM) before reporting.
B) Escalate immediately to Level 4 (RBI/NPCI).
C) Mandatory escalation to Level 2 (Circle/Zonal Office CTS Coordinator and concerned IT support).
D) Apply for an extension of the clearing hours from the President of the BCHC.
Explanation: Escalation is mandatory if an exception cannot be resolved within 30 minutes at the branch/RCC level. Since this is a technical exception impacting settlement timelines, the next level in the escalation matrix is Level 2 (Circle/Zonal Office).
Case 6: Handling of Stale Cheque
6. A branch official, during Step 1 (Initial Physical Validation) of the outward clearing process, receives a cheque dated May 1, 2025, on October 20, 2025. What is the required procedure for the branch official regarding this instrument?
A) Accept the cheque but mark it for manual intervention in the CTS system.
B) Mark the cheque as stale/post-dated and return it to the customer with a written explanation.
C) Process the cheque normally, as the continuous clearing system handles stale dates automatically.
D) Escalate the decision to the Branch Incharge for approval to accept.
Explanation: During the initial physical validation, the branch must physically examine the cheque for the date, ensuring it is "not older than 3 months". If stale, the procedure mandates that the official must mark it and return it to the customer with a written explanation.
Case 7: Customer Credit Post-Settlement
7. Bank C, the presenting bank, receives a positive confirmation file from NPCI at 1:15 PM, indicating that 50 instruments presented earlier were included in the 1:00 PM hourly settlement. What is the latest time Bank C must credit the customers' accounts for these passed instruments?
A) By the end of the business day (4:00 PM).
B) Immediately, but not later than the Item Expiry Time (7:00 PM).
C) Immediately, but not later than 2:15 PM.
D) By the first settlement cycle of the next working day.
Explanation: On completion of settlement, the presenting bank (Bank C) shall process the information and release the payment to the customers immediately, but not later than 1 hour from successful settlement. Since settlement confirmation was received at 1:15 PM, the latest credit time is 2:15 PM.
Case 8: Inward Cheque Return with Charges
8. An inward cheque is processed by the State Level RCC checker, and it is marked for return due to insufficient funds. The Return Reason Code used is '01' (Funds insufficient). What financial impact does this have on the drawee customer and the RCC?
A) The customer account is debited, and the RCC’s Intermediate Clearing Account (317119I) is credited.
B) The customer account is debited for returning charges, and the RCC’s Income Account (2031502) is credited.
C) The customer account is not debited, as Code 01 is among the reasons where charges are not to be levied.
D) The customer account is debited, and the RCC’s Balance with Other Offices Account (3211201) is credited.
Explanation: Return Reason Code '01' (Funds insufficient) is listed under the category "Reasons for which returning charges are to be levied". When the RCC processes the inward return and debits the returning charges, the customer account will be debited, and the RCC's designated income account (2031502 - RETURNING CHRG/HANDLING CHRG INWRD CLG) will be credited.
Case 9: The Role of 'CLGSTAT'
9. The National Grid Chennai receives status reports from NPCI conveying the settlement and fate (passed/rejected/extension) of instruments presented by the bank. Which menu in the Core Banking System (CBS) is primarily used by the Grid Service Branch/RCC to upload and update these crucial instrument status details?
A) OWCLG
B) INWCLG
C) CLGSTAT
D) HPR
Explanation: The menu CLGSTAT is specifically customized for uploading and updating settlement data and instrument-wise status details. It is used for uploading the instrument status file (CLGSTAT → UCN Update Cycle Number-Outward), updating extension details (CLGSTAT → UED), and uploading the final settlement file (CLGSTAT → UIS).
Case 10: Prohibition of Float/Shadow Balance
10. Under the new Continuous Clearing system, Bank D's customer asks why they cannot see a "shadow balance" reflecting the credit for a cheque deposited immediately upon presentation. How should the bank explain the revised policy?
A) Shadow balance is only available for high-value cheques above Rs 50,000.
B) Shadow balance functionality is only available during Phase 1 (up to January 2, 2026).
C) Settlement is only done for passed instruments on realization; therefore, no funds/float will be credited as a shadow balance, and the functionality has been removed.
D) Shadow balance is provided, but credit realization is delayed until T+3 days.
Explanation: Settlement will be done only for passed instruments, meaning no funds will be received for presented instruments until their fate is decided (Settlement on Realisation). Consequently, banks will not get any float to be credited to the customer account as shadow balance, and the functionality is removed.
Case 11: Outward Process Integrity
11. During the outward clearing process (Step 3), a branch user finds a discrepancy between the total amount lodged in CBS and the batch total generated in the CTS application. Under the new SOP, what feature, which might have previously been used to correct this discrepancy, is now explicitly unavailable?
A) Maker & Checker process.
B) The ability to transfer files manually to the CTS system.
C) Generation of the R-Report from the OWCLG menu.
D) The option for forced balancing.
Explanation: In the CTS application process, it is explicitly stated that "there will be no option for forced balancing," meaning balancing will only be allowed for instruments for which data from CBS is available.
Case 12: Requesting Extension Due to Non-Technical Reasons
12. On a busy clearing day, a State Level RCC manager, overwhelmed by high volume, wishes to request an extension for late return of unpaid inward instruments to ensure accurate processing. Which of the following is the appropriate procedure for the manager to follow?
A) Submit a request by email to the President, BCHC, with approval from the HO General Manager, citing high volume as a technical issue.
B) The request for late return due to non-technical reasons shall not be entertained.
C) Grant an internal extension up to one working day and escalate the delay to the Zonal Office.
D) Since high volume affects settlement timelines, Level 3 (HO) must apply for the extension.
Explanation: The RBI guidelines on extension requests state that permission for late return of unpaid instruments due to non-technical reasons shall not be entertained. Extensions are generally only considered for technical issues, connectivity failure, or natural/manmade calamity.
Case 13: Audit Trail Requirement
13. A compliance officer is auditing the Continuous Clearing system. Which detail is mandated to be logged for every action (upload, return, settlement, reversal) taken in the system to ensure a comprehensive audit trail?
A) Only the system status code and the date of the transaction.
B) The customer account number and the reason code only.
C) The user ID, date-time stamp, and system details.
D) The GL account number debited/credited.
Explanation: To maintain a comprehensive audit trail, the SOP mandates that "Every action (upload, return, settlement, reversal) is logged with user ID, date-time stamp, and system details".
Case 14: Risk Mitigation in CCSR
14. Which fundamental feature of the Continuous Clearing & Settlement on Realisation (CCSR) model serves as the primary mechanism for mitigating settlement risk?
A) The use of two-factor authentication for all users.
B) The mandatory implementation of Positive Pay System (PPS) for high-value instruments.
C) Settlement occurs only after funds are realized from the drawee bank.
D) Automated tools for daily reconciliation between CTS files and CBS postings.
Explanation: The core principle of "Settlement on Realisation" means the presenting bank only receives credit when funds are realized from the drawee bank. The SOP explicitly states that the Continuous Clearing System ensures settlement occurs only after fund realization, "thus minimizing settlement defaults" (Settlement Risk Mitigation).
Case 15: Outward Return Charges Accounting
15. A customer’s outward cheque is returned due to "Drawer’s signature illegible" (Code 11). The concerned State Level RCC executes the 'Tran Creation' function via CLGSTAT to debit the charges (as Code 11 mandates charges be levied). Which account is credited at the RCC level for these rejection charges?
A) Intermediate Clearing Account (317119I).
B) Balance with Other Offices Account (3211201).
C) Miscellaneous Income - Retail Banking (2061601).
D) Returning Charges/Handling Charges Inward Clearing (2031502).
Explanation: Upon execution of 'Tran Creation' using CLGSTAT for rejected instruments in Outward Clearing, the customer account will be debited for charges, and the RCC’s income account 2061601 (MISC. INCOME-RETAIL BANKING) will be credited. (Note: Account 2031502 is used for Inward Clearing Return charges.)
Metaphor to Clarify Settlement on Realisation:
The transition to Continuous Clearing and Settlement on Realisation is like moving from batch processing (a traditional mail delivery service) to a real-time escrow service. Under the old batch system, you might get a provisional credit (a shadow balance) based on the promise that the payment would clear later, like receiving a package based on the shipping notification. Under CCSR, the credit is only afforded when the payment is confirmed and the funds are physically moved (realized), akin to an escrow service releasing the funds only when the buyer explicitly verifies receipt and quality of the item. This ensures that the risk of default is minimized at the moment of payment release.
Post a Comment