What is Cheque Truncation System? CTS Benefits and Highlights of CTS Check.

Updated On : May 2018

What is Cheque Truncation System?

Cheque Truncation System (CTS) is a cheque clearing system undertaken by the Reserve Bank of India (RBI) for quicker cheque clearance. As the term proposes, 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.

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.

Reserve Bank of India (RBI) introduced pan-India CTS in September 2020 to make cheque clearing safer and faster. Recently, it was made mandatory for all banks to implement Cheque Truncation System (CTS) in all their branches across the country by September 30, 2021.

CTS will be a great move towards Digital India. IMPS, RTGS and NEFT were the game changers for the banking sector. Cheques are still one of the prominent modes of payments in India, and the speedy cheque clearance cycle via CTS will definitely result in better customer experience. It will also make the process more efficient, cost-effective and safer for the banks

Nelito's CTS has been implemented successfully in major public sector, private sector and co-operative banks in India. With the implementation of grid-based Cheque Truncation System, cheque clearing process in general has gained speed and operational efficiency in addition to other benefits such as business process re-engineering, cost effectiveness, better service and adoption of cutting-edge technology.

Team Nelito is currently implementing the solution in Myanmar. Our product meets guidelines of the National Payment and Settlement Systems in Myanmar and works on the principle of a mechanized clearing system called Mechanical Clearing House System (MCH) by Central Bank of Myanmar (CBM).

Benefits of Cheque Truncation System

• Time, money and manpower expended on physical transfer of cheques from banks to clearing house are eliminated
• Clearing related frauds become less plausible
• Probability of cheques misplaced in transit is eliminated
• CTS is more advanced and more secure.
• It provides quicker clearance of cheques
• Reduces operational risk and risks related to paper clearing
• There are no extra charges levied for the collection of cheques drawn on a bank located within the grid, further providing no geographical restrictions

Highlights of Cheque Truncation System Cheques

• All CTS cheques hold a watermark, with ‘CTS-INDIA’, which is visible when held against any light source
• Pantograph (wavelike design) with hidden / embedded word ‘VOID’ become clearly visible in photocopies of a cheque

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