CTS Clearing
The Cheque Truncation System (CTS) is a technology-based system implemented by many countries to enhance the efficiency and security of the cheque clearing process. It aims to eliminate the physical movement of cheques and the associated delays and risks involved in manual processing.
In traditional cheque clearing systems, physical cheques are transported from the branch where they are deposited to the clearinghouse, and then to the branch on which the cheques are drawn. This process involves physical transportation, manual sorting, and verification, which can be time-consuming and prone to errors. Additionally, the physical movement of cheques poses risks such as loss, theft, or damage.
Features
Deposit: When a customer deposits a cheque at their bank branch, the bank captures an image of the cheque using a specialized scanner or imaging device. The image includes the front and back of the cheque.
Image Transmission: The captured cheque image is securely transmitted electronically to the central clearinghouse or the clearing system operator. The image may be sent directly or through an intermediary, such as a regional clearinghouse.
Clearing Process: At the clearinghouse, the electronic image of the cheque is processed and verified for various parameters, including the authenticity of the cheque, signature verification, and other security features. The system also checks for duplicates and any irregularities.
Clearing and Settlement: Once the cheque image is verified and cleared, the clearinghouse electronically sends the settlement instructions to the paying bank or the branch on which the cheque is drawn. The settlement is typically done through interbank electronic funds transfer.
Archiving: After successful clearing, the cheque images are securely archived by the clearinghouse or the respective banks. The digital images serve as a legal record and can be retrieved if needed in the future.
