The Cheque Truncation System (CTS) involves halting the physical movement of the cheque and its replacement by an image/s of the instrument and the corresponding data contained in the MICR line. Previously CTS processing is divided into three grids in India - Northern grid with 9 states, Western grid with 5 states and Southern grid with 8 states. Now all CTS clearing GRIDS are merged in single GRID through India.
Banks have scanners and capture systems at their branches in different cities that are part of the Grid. The cheques processed at the respective cities are consolidated at the bank level and sent onward to the next step in the clearance process. Usually, there is a single settlement for each bank in the GRID with different clearing sessions.
Extended cut off time for acceptance of Customer Cheques by banks. Easy retrieval of information. Reduced timelines for clearing.
MICR amount encoding not required. Reconciliation difference eliminated - MICR and Image data travel together. No cheques being lost/tampered/pilfered. No risk of any manipulation of data and image during transit. CTS 2010 standards leading to enhanced security and automation.
Cost involved in paper movement eliminated. Grid implementation allowing better liquidity management for banks.
Manipulation of data and image during transit is prevented by digital signature / encryption. CTS 2010 standards lead to enhanced security (Pl refer to attached NPCI circular for CTS 2010 standard) MICR reject repair flag.