CTS Cheque Truncation System

• Definition of CTS Cheque Truncation System

• Meaning of CTS- Cheque Truncation System

• Process Of Cheque Truncation System

• Benefits of CTS Cheque Truncation System  

Definition of CTS (Cheque Truncation System)

A CTS Cheque Truncation System is popularly known as 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. 

Meaning of CTS (Cheque Truncation System)

The term ‘Truncation’ is used to make something shorter. CTS, or Cheque Truncation System, evolves the digitization in the Indian Banking system as it eliminates the physical cheque clearance process and makes it fast and safe by using digital images of the cheques. 

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 CTS Cheque Truncation System

One of the key benefits of the CTS system is that it significantly reduces the time taken for cheque clearance from several days to just one or two working days. It also helps to minimize errors and fraud in the cheque-clearing process, as the electronic transfer of cheque images reduces the risk of physical tampering or loss.