CHEQUE TRUNCATION

What is Cheque Truncation?

Truncation is the process of stopping the flow of physical cheques issued by the drawer to the drawee bank/branch. The physical instrument is truncated at some point en-route to the drawee bank and the electronic image of the cheque is sent to the drawee branch along with the relevant information such as MICR fields, date of presentment and so on. The need to move the physical instruments across branches is done away with thereby reducing the time required for payment of the cheques, the associated cost of transit and the delay in processing etc leading the speedy collection and realization of cheques. Advantage of CTS are:

Speeds up collection of cheques and thereby enhances customer satisfaction.
Reduces scope for clearing related frauds.
Minimises cost of collection of cheques.
Reduces reconciliation problems.
Eliminates logistical problems.