Cheque Truncation System (CTS)

The Reserve Bank of India (RBI) has announced a significant upgrade to the Cheque Truncation System (CTS), moving from the current batch processing model to a continuous clearing system with settlement on realisation. This transition will take place in two phases.

What is CTS?

CTS is an image-based cheque clearing system that captures cheque images and MICR data electronically at the collecting bank, eliminating the physical movement of cheques.
It is secured through a PKI-based architecture with dual access control, crypto box, and smart card interfaces.
Only cheques compliant with CTS-2010 standards (which mandate minimum security features like watermarks, invisible ink logos, void pantographs, and standardized formats) are eligible for clearing through CTS.

Benefits of CTS

Faster clearance with proceeds realizable within the same day under the new continuous clearing model.
Enhanced security and reduced risks in cheque processing.
Lower costs due to elimination of physical cheque transportation.
Improved data storage and retrieval with centralized image archiving.
Reduction in delays and bottlenecks between cheque presentation and realisation.

Current vs Future Processing

Current system: Cheques take up to two working days to clear.
New system: Cheques will be cleared within hours of submission, greatly speeding up the process.

Source: THE HINDU

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