What do you understand by Cheque Truncation System (CTS) ?

Cheques are used as a medium for exchange of funds, and play a key role in the funds management of customers and banks. The efficient cheque clearing system helps in settlement of receipts and payments. Cheque Truncation is a new system introduced in Indian Banking Scenario. It is a system of cheque clearance and settlement between banks based on electronic data and/or images without the need for exchange of physical cheques and negotiable instruments like demand drafts, pay orders, dividend warrants, etc. Special features of Cheque Truncation are:- Cheque realization is faster Quick realization helps the customer in better cash management In the long run, it reduces the administrative costs of bank Assists banks in reconciliation and reducing clearing frauds.