CTS stands for Cheque Truncation System. It is an online image based clearing system for cheques to be implemented in India from 1st April 2013, as per RBI directive.
Under CTS, cheque images and other relevant information are captured at the collecting bank branch and transmitted electronically for clearing. Thus, the cheque is ‘truncated’ in the cheque clearing process. This is aimed at reducing the time required for payment of cheques by curbing flow of the physical instrument, reducing cost of transit and delays in processing, thus speeding up the process of realization of cheques.
The new CTS enabled cheque contains the following 5 changes:
- Bank's logo is printed with invisible ink (ultra-violet ink) on the top left of the cheque.
- VOID Pentograph, below the account number, which is used to avoid counterfeiting, include a background design in the paper that is not detectable under normal circumstances.
- Cheque printer details /CTS-2010 across on the left hand side.
- New Rupee symbol in the Amount box.
- "Please Sign Above" text where you sign the cheque.
Starting 1st April 2013, only CTS-2010 compliant cheques would be accepted for clearing. Which means, that if you have given any post-dated cheques (for loan EMIs, to vendors, etc.) you will have to replace them with new cheque leaves, that can be obtained from your bank. Also, if you hold any post-dated cheques beyond 31st March, you will have to get it replaced with a new CTS cheque.
Also, one needs to be careful while writing these new cheques as alternations in the cheques on the main field like payee's name, amount in figures or words will not be processed. Earlier practice of doing the counter signature to authenticate the change will not be allowed in the new system from 1st April 2013. If done, then the cheque will be returned/not accepted. Also, it is advised to use dark coloured pens, so that the image of your cheque is clear during electronic image transfer.
This system, being practised worldwide in the banking sector, will enable cheque clearing on same day or maximum within 24 hours, depending on whether the cheque is local or outstation.
As physical cheques still account for 75-80% of all transactions in the Indian banking sector, RBI’s step is in the right direction. This will prove to be more secure, cost-effective, operationally-efficient and faster for both banks and customers.