Full Form of CTS
Cheque Truncation System
CTS Full Form is Cheque Truncation System. CTS or Cheque Truncation System is a pet project of Reserve Bank of India. It was started in 2008, to ensure faster clearance of the Cheques.
Principle of CTS:
CTS is basically based on the principle of an online image-based system which clears the Cheque through Cheque images and by recognizing the magnetic ink character.
The whole data is captured at the branch where the Cheque is to be cleared and the data is transmitted through electronic channels and servers. It has become mandatory for the banks to issue CTS enabled Cheques to all their customers.
What is the need for CTS?
RBI or Reserve Bank of India has enabled the customers to pay online in real time. RTGS or NEFT, but when it comes to larger amount Cheques are the still the main mode of transactions and payments. Keeping in mind this the RBI decided to improve the overall efficiency of Cheque clearance.
Benefits of CTS
CTS has a number of Benefits. It reduces the risk proportions as Cheque clearing can be very fraud-prone. It has shorter clearing cycle, and enhanced level of verification thus giving the direct benefits to the customers. It also saves the time and cost for the bank. The other thing that can be kept in mind is that it has no geographical restrictions and can be cleared anywhere during the bank hours.