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__________ Conversion of physical cheque into electronic form for transmission to the paying bank.

  • The Cheque Truncation System (CTS) is a system that converts physical cheques into electronic forms for transmission to the paying bank.
  • Under CTS, instead of physically moving the cheque from one bank to another, an electronic image of the cheque is created and transmitted through the system.
  • The electronic image contains all the necessary information from the physical cheque, including the cheque number, account number, and bank details.
  • When a cheque is deposited in a bank, it is scanned and an electronic image is created.
  • The image is then sent to the clearing house for further processing.
  • At the clearing house, the electronic image is checked for authenticity, and if everything is in order, the cheque is cleared and the payment is made to the beneficiary's account.
  • The use of CTS has several benefits, including faster clearing and settlement times, reduced paperwork, increased security, and fewer errors in the clearing process.
  • It has made the process of cheque clearing and settlement more efficient, secure, and reliable.