Introduction of CTS-2010 & Cheque Truncation system are the steps undertaken by the Reserve Bank of India for faster clearing of cheques. With the migration to new CTS clearing system, the old format of cheque leaf in banks is substituted by the new look “CTS-2010 standard” cheque leaf. CTS-2010 is a ‘standard cheque form’ with more security and standardized features. In CTS-2010 standard cheque forms, mandatory features are prescribed with set of benchmarks as specified by RBI. One of the mandatory features of the CTS (Cheque Truncation System), prescribed by RBI is that no changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations.
Cheque Truncation System (CTS): Cheque Truncation System (CTS) is basically an online Image-based Clearing System (ICS). In this system the collecting bank need not present the physical cheque to the drawee branch.The physical instrument is truncated at some point en-route to the drawee branch and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc. In the process, time taken for payment of cheque, cost of transit is considerably reduced, as the instrument need not reach the drawee branch except in exceptional circumstances. The cheque images and Magnetic Ink Charecter Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically, to drawee branch, thus speeding up the process of collection and realization of cheques.