Cheque Truncation System (CTS)
Why it Matters?
The RBI will shift the Cheque Truncation System (CTS) from batch processing to continuous clearing with settlement on realisation, aimed at faster cheque processing. The rollout will be in two phases — Phase 1 on October 4, 2025, and Phase 2 on January 3, 2026.
What You Should Know?
CTS is an electronic image-based cheque clearing system that eliminates the need to physically move cheques between banks.
CTS captures a scanned image and MICR (Magnetic Ink Character Recognition) data of the cheque, which is transmitted electronically for clearing and settlement.
It uses encryption, digital signatures, and watermarking to prevent fraud.
It has a faster clearing cycle, usually same-day or next-day settlement.
It reduces paper usage and transportation costs.
It is aligned with Digital Banking Standards. Near real-time processing akin to NEFT/UPI.