What is the full form of CTS ?

What is CTS?

CTS is an abbreviation for Cheque Truncation System, it is a system used by banks to clear cheques from other branches without actual transfer of cheques.

This method was put in place by the Reserve Bank of India to allow banks to complete checks more quickly and accurately. As a result, the checks are not physically moved from one bank to another. The technology makes use of a digital image of the check that is electronically sent to the other bank. The drawer bank sends the drawee bank an electronic image of the check together with a MICR number.

The goal of a cheque truncation system was to accelerate the clearing of checks. This technique greatly reduced the processing time for a transaction based on a check, with completion taking only a few minutes.

The majority of countries throughout the world already use cheque truncation, which was first implemented in India in 2006. Everything you need to know about cheque truncation will be covered in full in this article. Continue reading to learn more about this crucial method of speedy cheque clearing.


  • RBI ordered banks to only accept CTS-2010 checks in August 2013.

  • The Reserve Bank of India established the CTS in New Delhi in 2008.

  • CTS was launched in Chennai in September 2011.


  • Transactions across states are now possible.

  • Decreased likelihood of check fraud.

  • It has relieved the banks of a heavy burden.

  • Checks are cleared more quickly than before.

  • No reports of misplaced checks.

  • Faster check processing that saves time and money.

  • Fewer opportunities for transactional errors.


  • The top of the cheque leaf typically has the IFSC Code printed on it.

  • The standard of the paper will be maintained.

  • Ideally, the bank's logo will be printed in invisible ink.

  • The image quality of these checks is good.

  • more security features built-in.

Process of CTS

  • The first step in clearing a cheque in CTS is for the presenting banker to use its internal capture system to record the data and image of the check.

  • The presenting banker then sends the data, together with an encrypted and digitally signed image of the check, to the clearing house for processing by the paying bank.

  • The bankers employ the Clearing House Interface (CHI), an interface that allows for the transmission of the data and images that are taken, to carry out this transaction. Following data processing, CHI sends photos and data to the paying banker after recording the final payment amount.

  • This step is known as Presentation Clearing. They are paying bankers to acquire the data needed to process payments using their CHI. The return data is subsequently processed by the Clearing House in the return clearing session and communicated to the presenting banker. The clearing of the check is finished once the presentation clearing and return clearing sessions are over.

Impact on Government Department

  • Based on online photographs of the checks, Schedule III will be linked to and paired with the appropriate checks.

  • The way that checks are now issued will not change.

  • Government departments are not compelled to spend anything.

  • It is necessary to establish after-payment reconciliation procedures.

  • Very simple to integrate CTS with the current system.

  • The department will keep receiving its payments.

  • The Department itself may produce an image replacement document if necessary.

  • The codes and manuals governing the settlement of government departments' checks using legally valid electronic images rather than paper copies may need to be revised.


  • The National Institute of Standards and Technology (NIC) would research, recommend, and maintain security measures for tamper-free data transit

  • For storing the photographs of checks, NIC would offer a uniform approach that government departments may use.

  • Before being implemented across the nation, CTS will begin as a pilot project in the NCR.

  • By September 2006, the National Informatics Center (NIC) would create software in collaboration with RBI and CGA.


In this article, we learned how the Cheque Truncation System has benefited both customers and bankers as a whole in the banking industry. The risks associated with the actual presence of the cheque have been eliminated. Moreover, banking organisations and regulators all across the world employ a similar structure. Cheque clearance has gotten faster and more secure recently. Look at the following FAQs if you have any questions, they will be very helpful.


Q1. What distinguishes CTS checks from those that are not CTS?

Ans. Non-CTS cheque books are any cheque books that don't have a CTS-2010 cheque leaf. The transaction is faster and more reliable with CTS 2010 than with previous versions. Additionally, the current CTS system's security and effectiveness have been improved by RBI, which is positive.

Q2. In CTS, how many grids are there?

Ans.Under CTS, the three grids in Chennai, Mumbai, and New Delhi serve as the primary hubs for cheque processing in India. Every grid offers processing and clearing services to all the banks that fall within its particular purview.

Q3. What services would the RBI offer to make cheque truncation easier?

Ans. The services provided by the RBI include network, handholding, awareness evangelization, system development and installation at the clearing house, interfaces at the banks' end, and training.

Updated on: 14-Apr-2023


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