What is Cheque Truncation System (CTS)? Under the old paper cheque based clearing, the SBI bank will send the paper cheque to the clearing house and get the money and then transfer it to your account. This is still time consuming. because SBI (or any bank) would need to physically move the cheques to a clearing house. So RBI came up with a new idea known as ‘Cheque Truncation System (CTS)’. In this Cheque Truncation System (CTS), SBI branch will not send the paper cheque to the clearing house, but instead, it’d merely scan the cheque, and electronically send the image + MICR* data, to the clearing house. From the clearing house, the data would goto the paying bank (Citibank in our example), they will inspect the MICR data, signature on the scanned image and release the money to SBI. This process is faster and more safer than the conventional paper-cheque clearing method. *MICR = Magnetic ink character recognition.
Posted on: Sat, 10 Aug 2013 02:30:40 +0000
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