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Cheque Truncation System, Clear to Send

CTS FULL FORM IS Cheque Truncation System. The Reserve Bank of India launched the CTS project in order to clear cheques faster. The system does not involve the physical transfer of cheques from one bank to another bank.

Instead, it uses an online image-based cheque clearing system. This system sends an electronic image of the cheque along with the MICR number to the drawee bank from the drawer bank. This allows for faster clearance of cheques.

The entire process is online. Firstly, the cheque information is printed on an optical character reader (OCR) machine. The MICR number of the bank it’s drawn in and the bank account number are also printed along with the cheque information.

This information is then transmitted to a computer in which there is software that converts this print-based data into an electronic format in order to be useful for transportation across the banking network

Once received, the image of the front side of the cheque includes all relevant details such as payee name, date, amount, etc. The backside of the cheque contains all required banking details like a branch, account number, etc. These images are available instantly for transferring through Image Intermediaries.

This process of data transmission is directly from the branch of the drawee bank to the branch of the beneficiary bank. In order to ensure that there can be an uninterrupted flow of electronic images, strict levels of internet connectivity are required between every two offices.

The Branch Manager has a user ID and a password which he/she can use to directly access this system for cheque clearing at any time.

Once he/she logs in, they will receive information about all their branches with an internet connection. The branch manager can then request cheque images from another branch by entering details such as amount, payee, etc., through his / her online application.

The software will send all necessary information to that other branch via Image Intermediaries, which will then convert the cheque image into electronic form.

On receiving this request, the other branch will send an acknowledgment to the initiating branch. And once they are ready with processing the cheque further, the other branch sends back a message confirming that the image is sent for clearing.

The software at originating branch prints out another copy of the cheque for ledger accounting purposes and finally processes it electronically by deducting money from one account and crediting it to another account. This way, CTS has helped in reducing the turnaround time of cheques to just two days!

Although there have been complaints that only about 22% of payments are being credited within 2 working days as mandated by RBI, technically this system does process 85% of all transactions much faster than it would have been before the initiation of CTS.

The primary objective of the Cheque Truncation System is to speed up cheque collection by allowing banks to exchange cheques electronically. The system provides for electronic images of the front and backside of a cheque being sent from one bank to another through Image Intermediaries instead of sending physical samples which are required earlier.

This not only speeds up the whole process but also reduces paperwork since all information can be transferred online without any paperwork involved which in turn reduces the cost of resources like ink and paper.

Also, it helps in faster clearance time since there is no chance for the cheques getting misplaced while they are being physically transferred between different banks.

Another major benefit is that it reduces the time required for clearance of cheques since there is no need for physical transportation which means it decreases turnaround time.

Apart from this, it eliminates problems associated with differences in fonts used by different banks which often leads to errors while transferring data between different banks.

There are some concerns related to security and privacy which make people think more before using the system but overall, CTS has proved to be a good step towards the modernization of banking systems in India

Benefits of CTS (Cheque Truncation System)

  • -The Benefits of CTS include:
  • -Reduced processing time for both customers and banks
  • -Reduced costs for banks
  • -Reduced paper wastage
  • -Elimination of lost or stolen cheques
  • -Reduced chances of fraud
  • -Reduced risk of cheques getting lost
  • -Improved customer service.

CTS: Clear to Send

Clear to Send (CTS) is a control signal in RS-232 standard that indicates when an item such as data or voice can be transmitted. It’s sent by the sending device and received at receiving end with RTS, which tells them they’re all set for you to input your message; however, there are some exceptions on how CTS works: if both senders don’t have any messages then it would only show Silence before initiating transmission–this way no one will interrupt another person’s conversation!

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