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What-is-Cheque-Truncation-System-(CTS)

 

What is Cheque Truncation System (CTS)

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Introduction-

Cheque Truncation System (CTS) is a cheque clearing system undertaken by the Reserve Bank of India (RBI) for quicker cheque clearance.
 
Cheque Truncation System brings elegance to the whole activity of cheque processing & clearing and offers numerous benefits to banks like time and cost savings, cost effectiveness, including human resource rationalization, business process re-engineering and enhanced customer service.
 
Truncation is the course of discontinuing the flow of the physical cheque in its way of clearing. Instead of this an electronic image of the cheque is transferred with vital essential data.
 

 

Benefits of Cheque Truncation System-

  • CTS is more advanced and secure
  • It extended cut off time for acceptance of Customer Cheques by banks
  • Reduced timelines for clearing
  • No cheques being lost/tampered/pilfered
  • No risk of any manipulation of data and image during transit
  • Cost involved in paper movement eliminated
  • Grid implementation allowing better liquidity management for banks
  • Manipulation of data and image during transit is prevented by digital signature / encryption.
  • MICR amount encoding not required

 

CTS scenario-

In CTS scenario, the physical instrument is truncated at presenting bank end (either at branch level or service branch level). The images & data of collected instrument captured at presenting bank would travel electronically to drawee bank for processing same day. The return cycle would be completed next day. The return cycle would be completed next day & settlement is completed on completion of return cycle. The customer would get funds on completion of settlement process. Further all clearing locations are divided in 3 regional grids. All Clearing locations are of a grid are settled together on T+1 basis.
 



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