Cheque Truncation Systems (CTS)

Cheque Truncation System (CTS) is the process whereby the image of cheque or instrument is used for clearing the fund instead of handing over the physical instrument. Clearing system in India had been functioning based on the physical delivery of cheques by the collecting bank to the paying bank. With the introduction of Cheque Truncation System, the physical instrument remains with the branch of the collecting bank and only the image is transferred to the paying bank. CTS introduced by RBI has enabled banks to save cost, improve efficiency of clearing and optimise manpower.

Processes involved in Cheque Truncation Systems (CTS)

Electronic image of the cheque is captured in the specified format through scanning
The image captures the MICR data in the MICR band of the cheque too
Amount of the cheque is entered manually to the system
Physical storage of cheque happens at the branch of collecting bank
Captured image along with other details are exchanged across the banks through the CTS facility at the clearing house
Images and data are transmitted through a secured network
Settlement happens on the basis of MICR data captured

What is a GRID CTS?

Grid based Cheque Truncation Systems (CTS) was initially launched in India with the intention of covering the entire area under the grid by a common CTS. Three grids have been formed with centres at Chennai, Mumbai and Delhi.