CTS or Cheque Truncation System is the automation of clearing process in the bank for faster payment of Cheques. This is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch.
In its place an electronic image of the cheque is transmitted to the paying branch through the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.
Cheque Truncation System thus obviates the need to move the physical instruments across bank branches, other than in exceptional circumstances for clearing purposes.
This effectively eliminates the associated cost of movement of the physical Cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing.