New cheque truncation system (CTS) from 1 Jan 2013

What is Cheque Truncation System (CTS) or Image-based Clearing System (ICS),

Cheque Truncation System (CTS) or Image-based Clearing System (ICS), in India, is a project undertaken by the Reserve Bank of India – RBI, for faster clearing of cheques.

CTS is basically an online image-based cheque clearing system where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically.

Truncation means, stopping the flow of the physical cheques issued by a drawer to the drawee branch. The physical instrument is truncated at some point en-route to the drawee branch and an electronic image of the cheque is sent to the drawee branch along with the relevant information like the MICR fields, date of presentation, presenting banks etc.

Advantages of CTS

For Banks:

  • Banks can expect multiple benefits through the implementation of CTS, like faster clearing cycle means realization of proceeds of cheque possible within the same day.
  • It offers better reconciliation/verification process, better customer service and enhanced customer window.
  • Operational efficiency will provide a direct boost to bottom lines of banks as clearing of local checks is a high cost low revenue activity.
  • Besides, it reduces operational risk by securing the transmission route.
  • Centralized image archival system ensures data storage and retrieval is easy.
  • Reduction of manual tasks leads to reduction of errors.
  • Customer satisfaction will be enhanced, due to the reduced turn around time (TAT). Real-time tracking and visibility of the cheques, less fraudulent cases with secured transfer of images to the RBI are other possible benefits that banks may derive from this solution.


For Customers:

  1. CTS / ICS substantially reduces the time taken to clear the cheques .
  2. Cheque will be cleared in one day
  3. better customer services and
  4. increases operational efficiency by cutting down on overheads involved in the physical cheque clearing process.
  5. In addition, it also offers better reconciliation and fraud prevention.
  6. CTS / ICS uses cheque image, instead of the physical cheque itself, for cheque clearance thus reducing the turn around time drastically.

 What is the new format of cheque

The new CTS enabled cheque contains about 5 changes in the existing cheque which are described below.

1. Bank’s logo is printed with invisible ink (ultra-violet ink) on the top of the cheque

2. VOID Pentograph which is used to avoid counterfeiting, include a background design in the paper that is not detectable under normal circumstances.

3. Cheque printer details /CTS-2010 on the left hand side

4. New Rupee symbol near the Amount field.

5. “Please Sign Above” text where you sign the cheque.

A graphical image of the new CTS Cheque is shown below



New Cheque Format as per HDFC Bank


If you haven’t received the new form of cheque books already, speak to your bank as early as you can. “Banks could adopt two methods to replace the old cheques. One is to send new cheque books by registered post and ask users to cancel the old ones.

What happen to EMI cheques already given

You need to replace old cheques with new cheques.


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