Here are some notes on Cheque Truncation System (CTS) in banks in detail:
- Cheque Truncation System (CTS) is an image-based cheque clearing system that eliminates the physical movement of cheques.
- CTS was introduced in India in 2009 by the Reserve Bank of India (RBI) to improve the efficiency and speed of cheque clearing.
- Under CTS, the physical cheque is not sent to the paying bank. Instead, an image of the cheque is captured at the collecting bank and transmitted electronically to the paying bank.
- The paying bank verifies the image of the cheque and credits the funds to the payee’s account.
- CTS has a number of benefits, including:
- Faster cheque clearing: The time taken to clear cheques is significantly reduced under CTS.
- Reduced operational costs: The cost of clearing cheques is reduced under CTS.
- Improved security: The risk of cheque fraud is reduced under CTS.
- CTS is mandatory for all banks in India. However, there are a few exceptions, such as for cheques drawn in rural areas.
Here are some additional notes on Cheque Truncation System (CTS) in banks:
- CTS code: The CTS code is a unique code that is assigned to each cheque under CTS. The code is used to identify the cheque and to track its progress through the clearing system.
- CTS images: The CTS images are stored in a secure database. The images can be accessed by the paying bank and by the RBI for verification purposes.
- CTS fraud: There have been a few cases of cheque fraud under CTS. However, the risk of fraud is significantly reduced under CTS compared to the traditional system of cheque clearing.