Introduction to Banking
Cheque Truncation System (CTS)
Satish wondered how money gets transferred from one account to another so easily in case a cheque is issued. He knew that the cheque has to go through RBI, but did not understand how does the cheque travel from the ATM (when a cheque is dropped at a dropbox in the ATM) to the bank and then to RBI and then to the recipient’s bank within a few hours of depositing a cheque in an ATM?
The bank representative smiled at this question and informed Satish about the Cheque Truncation System or CTS.
CTS is a cheque clearing system used by RBI for quicker clearance of cheques. It is a system through which the flow of the physical cheque has been discontinued and the electronic image of the cheque along with vital data is transferred instead. This system has brought elegance to the whole cheque processing activity. It has also benefited the banking system in terms of time and cost savings and cost-effectiveness. This process was implemented on 1st April 2013.
All CTS cheques hold a watermark with a ‘CTS-INDIA’ mentioned which is visible against any light source. A pantograph with a wavelike design and a hidden and embedded word ‘VOID’ is also visible in the photocopies of a CTS cheque. In general, ‘CTS 2010’ is printed on all cheques near the perforation which is visible to the naked eye.
Benefits of the Cheque Truncation System:
- CTS is an advanced and secured system.
- It enables quicker clearance of cheques.
- The CTS system has saved time, money, and manpower by doing away with the need for physical movement of cheques between banks and RBI.
- It has reduced the probability of misplacement of cheques due to physical transfer.
- It has reduced the possibility of fraud related to the clearance of cheques.