Cheque Truncation System (CTS) :

Cheques are being used as a medium for exchange of funds, which play a key role in the funds management of customers and banks. The efficient cheque clearing system helps in settlement of receipts and payments. Cheque Truncation is a new system introduced in Indian Banking Scenario. It is a system of cheque clearance and settlement between banks based on electronic data and/or images without the need for exchange of physical cheques and negotiable instruments like demand drafts, pay orders, dividend warrants, etc.

Cheque truncation – Special features:

– Bank customers would get their cheques realized faster

– Quick realization helps in better cash management (receivables/payables)

– In the long run, it would reduce the administrative costs for bank

– Importantly this would assist banks’ in reconciliation and also reduction in clearing frauds.