MICR Encoders Detail guidelines

MICR CHEQUE ENCODER is a tabletop machine that can print the coded particulars of cheques and other instruments in magnetic ink in the 5/8” read band in the specified position. A conventional encoder of stand-alone type has a keyboard, a programmable journal printer, and a MICR cassette/ribbon typewriter.

The machine can simultaneously with encoding, endorse on the reverse of the instrument, a fixed or variable stamp i.e. clearing stamp of the presenting bank/branch. The encoder can, during encoding, prove the pay-in-slip amount or the control total by marking off successive amounts of encoded cheques thus arriving at a zero balance when all the cheques are encoded, bringing out during the process any discrepancy in the totals or wrong encoding, if any.

The encoder should have the facility to encode all the five fields or any of the fields desired to be completed by pressing the relevant functional keys and by keying in the digital information i.e. the code number of the field concerned. There should also be a provision to automatically endorse the clearing stamp on the reverse, simultaneously with the encoding.

In addition, it should be possible to skip the encoding or endorsement when needed, say when the amount field is already encoded and the instrument is being represented. There should be a provision for multiple positioning of endorsement on the reverse to take care of such cases. At the end of encoding each lot of cheques, the encoder should have the facility to encode the branch-wise Batch Ticket for the number and amount of cheques in the lot and ultimately the Block Ticket prepared for the bank as a whole on the basis of the cumulated batch values of instruments presented by a bank.


2. Initially, when MICR technology was introduced at the four metropolitan centers a decade ago, banks had installed stand-alone encoder machines without PC interface. Presently, however, the technology has advanced and encoders with P.C. interface are available, by use of which additional data including the information of pay-in-slip can be entered so that full outward clearing information could be taken on the P.C. at the branch for balancing of outward clearing and also for further processing of the data so captured for accounting purposes. MICR Readers are available with PC interface for capturing the preprinted information in the MICR code line to save on data entry and also ensuring accuracy.

Recently, MICR Reader-cum-Encoders have also come in the market, using which it is possible to capture the data of the pre-printed fields in the MICR code line and supplement the information with data entry as also encoding of the instruments simultaneously. This will enable balancing of the outward clearing and also building up the database on cheques presented for subsequent use say for the posting of the ledgers, etc. Encoding of the instruments could be done simultaneously or later on by encoding the instruments at one go (power encoding) on the basis of the data file. The type of encoder to be purchased by a member bank would, therefore, depend upon the existing and proposed level of computerization in the branches/ Service Branch where the encoders are to be located.

3. Depending upon the total volume of the cheques presented in clearing and the volume handled at the individual branches, encoders may have to be installed at the Service Branch to encode cheques centrally or having encoders also at some branches having adequate volume so that the cheques could be encoded at the branches and the completed batches could be forwarded to Service Branch for presentation. The banks will have to take their own decision on whether to encode cheques centrally or decentralize encoding work, fully or partly, depending upon the cheque volume, space, and organizational availability. Necessary guidance in this regard could also be obtained by the banks from their Service Branch at any of the existing MICR centers.

4. Presently, some MICR Document Encoders are manufactured/assembled locally. Several companies are also supplying imported MICR Document Encoders/Readers/ Reader-cum-Encoders with PC interface. M/s APLAB Industries Ltd., M/s Bradman India Ltd., M/s Kores India Ltd., M/s NCR Corporation (India) Pvt., Ltd., M/s Tata Infotech Ltd., etc., are some of the companies who supply such equipment. The list is only indicative and not exhaustive, there could be more such suppliers. For further information and guidelines for procurement, the member banks are advised to get in touch with their Service Branches at the four metropolitan cities or their Computer Policy and Planning Department.

5. The encoders, being computer peripherals, need a dust-free environment. Suitable site preparation, power connection, air-conditioning, etc., may have to be provided in consultation with the suppliers of the machines. Encoder operation, being quite simple, the existing staff could handle the work with minimum training. The vendors supply the necessary operation manuals along with the equipment and also provide training to the operators. They also provide post-warranty maintenance of the machines.

6. The quality of encoding is crucial to the MICR cheque processing system since bad quality encoding or use of sub-standard MICR ribbon could lead to a large number of rejects during machine processing of the instruments at the MICR centers. This, apart from increasing the workload at the cheque processing center, could also lead to errors in reading/data correction resulting in avoidable clearing differences. It is, therefore, necessary that the encoders are placed in a clean environment and are serviced by vendors regularly. The quality of the MICR ribbon used on the encoder machines is also another important factor. The bank should procure good quality MICR ribbons. The ribbons have a limited shelf life and hence should not be procured in bulk and also should be stored properly in dust-free environment. The banks should peruse the Reject Analysis Report furnished by the MICR Cheque Processing Centre regularly and take prompt corrective action.

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