Cheque Truncation System (CTS) and its advantages

Banking Awareness Study Material

Cheque Truncation System (CTS) and its advantages

Cheque Truncation System or CTS means that in place of physically transferring a cheque from the collecting bank to the paying bank, an electronically generated image is sent to the drawee bank through the clearing house, for the clearing of cheques. CTS thus speeds up the whole cheque clearing process by avoiding physical transfer of cheques. The cost of transferring cheques physically is eliminated.

Advantages of Cheque Truncation system

1. The Clearing cycles are shortened, hence the speed of the whole clearing process is improved.
2. The cheques can be cleared without any geographical restrictions.
3. The loss of cheques during physical transfer is completely avoided.
4. The verification and reconciliation process is superior.
5. The operational efficiency of the entire banking system is improved, which results in better customer service and secure banking for the entire public.
6. The operational risks and risks associated with paper clearing are reduced considerably which results in the benefit of all bank customers