Cheque Truncation System


 
 
Concept Explanation
 

Cheque Truncation System

Cheque Truncation System (CTS):Truncation is the process of stopping the flow of the physical cheque, issued by a drawer, at some point with the presenting bank en-route to the drawee bank branch. In its place, an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation, thus, obviates the need to move the physical instruments across branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing.

 
 


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