The full form of CTS is Cheque Truncation System.
It is a great and quicker procedure to authorize the cheque accomplished by the Reserve Bank of India. As the CTS suggests, truncation is commonly known as the process of eliminating the long cycle of manual cheques. It is a modern and contemporary system of cheque clearance.
The clearing protocol of a cheque embarked by RBI for fast cheque authorization is known as Cheque Truncation System.
It reduces both human effort and time. In this system, the electronic form of a cheque is transmitted along with the required data. The electronic aspects may be in the pictorial form or another embodiment.
Advantages Of Cheque Truncation System
The Cheque Truncation System has numerous advantages which are mentioned below:
- It is cost-efficient, rather than the physical cheque, you are supposed to transfer the electronic aspect of the quick in the form of an image which saves the cost of transportation.
- It saves time, as there is no need to visit the bank, that is why the time is being saved. Before we need to visit the bank for authorization of a cheque.
- The system enhances customer services and contributes to the digital India scheme.
- The process of cheque authorization becomes easier, quicker, and safer for the banks. It will eliminate all the risks of fraud and conspiracy.
- After implementing the CTS system the probability of misplacing if checked in the process of transmitting it is eradicated.
- The most abundant advantage of CTS is that it is quicker than the traditional system of physical cheques.
Disadvantages of Cheque Truncation System
Along with the advantages, there are few disadvantages of the CTS system too. These are given under:
- The persons who are not friendly with the digital approach will feel embarrassed and will not be able to place cheques.
- The procedure of setting up a CTS system in banks all over India takes time and money too.
- The job opportunity for cheque collectors is being removed and thousands of employees get unemployed.
- The CTS system requires a lot of time to be known to billions of the population of India, the unaware one will not be able to clear their cheques.
The Procedure Of Cheque Truncation System
The procedure of the cheque truncation system is simpler and sober than the traditional procedure. The process is mentioned below:
- Collection of cheques in digital form.
- Apprehending data in the servers.
- The data is then protected and the risk of plot holes will be eliminated.
- Authorization of house interface.
- The clearance of the presentation takes place.
- The process of payment takes place by any digital or UPI application.
- The process is completed with security and privacy.
CTS In India
In India, the CTS system will be a game-changer. It reduces both time and human effort. In the busy life of people, the CTS system will make their transactions quicker and easier.
But there is a shortcoming of the Cheque Truncation System system in India, especially for the illiterate population. They are supposed to face difficulty in the process of clearing the cheques.
The network problems in India are still a big issue. The isolated areas will suffer after implementing the CTS system. Firstly, the government needs to provide proper internet facilities to all parts of the country before implementing the CTS system.