Definition of CTS (Cheque Truncation System)
A CTS Cheque Truncation System is popularly known as an ICS (Image-based Clearing System) in India. The RBI (the Reserve Bank of India) launched the CTS Cheque Truncation System in 2008. (Click here to learn about the recent Digital e-Rupee launched by RBI) The Cheque Truncation System is a modern-aged, image-based system that encourages cheque processing electronically using the MICR (Magnetic Ink Character Reader) data along with a scanned image. It updates the traditional way to clear a cheque in a bank or any financial institution as it eliminates the physical cheque requirement.
Process Of Cheque Truncation System
CTS, or Cheque Truncation System, is a systematic process to clear cheques in the banks. Check the process flow of the CTS- Cheque Truncation System in the below image:
Benefits of the CTS Cheque Truncation System
Benefits of CTS:
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It reduces the time and cost of cheque collection and processing.
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CTS enhances the security and reliability of cheque transactions, as it uses digital signatures and encryption.
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It eliminates the risk of cheque loss or damage in transit.
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CTS enables faster realization of funds and better customer service.
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It facilitates the implementation of grid-based clearing, which removes the geographical restrictions on cheque clearing.
CTS is a part of the RBI’s vision to promote digital payments and financial insertion in India. It has been made mandatory for all banks to implement CTS in all their branches by September 30, 2021