Full Form of CTS

Full Form of CTS – Cheque Truncation System

The full form of CTS is Cheque Truncation System. It is a clearance system for cheques used by the Reserve Bank of India (RBI) for faster cheques’ clearances. Instead of using the cheque’s physical copy to complete the clearance process, CTC uses the electronic image of the cheque along with relevant cheque details.

Role

Cheque Truncation System provides for the fast collection process of cheques by using the cheque’s electronic image to be cleared along with key data. It eliminates the need for physical movement of the cheques across the banks except in extraordinary circumstances. CTS’s role is to enable electronic processing of the cheques by using cheque images and relevant data, which is captured by the presenting bank and forwarded to the paying bank for its processing.

History

Cheque Truncation System was implemented in the following states as follows:

• New Delhi: From 1^st February 2008.
• Chennai: From 24^th September 2011.
• Mumbai: From 27^th April 2013.

CTS has now been adopted throughout the country.

Process

Let’s Discuss the following process.

• Cheque clearance in CTS starts with the presenting banker capturing the cheque’s data along with its image using its internal capture system.
• The presenting banker then sends the data along with the cheque’s image, being digitally signed and encrypted to the Clearing House to the paying bank for further process.
• To carry out such interaction, the bankers make use of an interface named Clearing House Interface (CHI), by way of which the captured data and images can be transmitted. CHI then processes data, and after taking on record the final amount of settlement, forward the images as well as data to the paying banker.
• This process is known as Presentation Clearing. Paying bankers makes use of their CHI to receive the data for the processing of payment. Clearing House then processes the data in return clearing session, and the return data is communicated to the presenting banker. Once the presentation clearing and return clearing sessions are complete, the clearing of the cheque is completed.

Format

There are some fields that form important features of a CTS cheque.

• Branch address along with IFSC of the bank on the top of a cheque.
• Date in dd/mm/yy format inboxes.
• The printer’s name with CTS-2010 was written across the left side of the cheque.
• Pantograph placed below the account number, which will show “Void/Copy” if someone takes a photocopy of the cheque.
• Rupee symbol.
• The words “Please sign above” are written on the bottom of the cheque.
• The visible watermark “CTS India” (to be visible if the cheque is placed in light).
• The ultraviolet logo of the Bank to be printed at the upper left corner of the cheque.

Advantages

• The physical process of flowing the cheque from banks to clearing house involved too much of cost and time. CTS eliminates the same.
• The risk of cheques being lost or stolen in transit is eliminated now.
• The process used by CTS is very secure.
• The time taken to clear the cheques has reduced significantly.
• There are no limitations with respect to geographical locations with the use of electronic mode.

Conclusion

The use of the Cheque Truncation System in the banking sector has helped the customers as well as the bankers as a whole. The need for the cheque’s physical presence has been eliminated along with the risks involved in it. Also, a similar system is used by banking institutions and regulators across the globe. The clearance of cheques has become faster and secure now.

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