Cheque Truncation System – Change Looks good

cheque truncation system CTS

SBI is issuing new cheque books which conform to the standards of CTS-2010 (Cheque truncation system) to all its customers. It has issued a public notice saying that starting January 1, 2013, bank will not accept cheques that do not conform to the new standards. Even it has advised their customers to update their new address in bank records so they can receive the new cheque book on time.

In December 2011, RBI had issued notification regarding implementation of CTS 2010 standards and SBI is the first bank to implement these standards. Through CTS RBI has taken another step after RTGS and NEFT to improve the efficiency in banking system and specifically of bank clearing cycle.

What is Cheque truncation System?

In simple language, this is a system which helps in avoiding the physical transportation of the instrument from presenting bank to the drawee bank. Through this system electronic image will be send to the drawee bank and on the basis of that money will be transferred to the presenting bank. As RBI wants to reduce the physical movement of instruments so cheque truncation comes out to be alternative to that. As per RBI, this is a more secure system than the earlier one of exchanging physical cheques which not only create delays but also inconvenience to the customer if the instrument gets lost or manipulated in the clearing cycle.

Why CTS-2010 requires the issue of new cheque books?

As in this truncation system cheques are to be exchanges electronically, so it is very much necessary that the scanned image should be very much clear. For this RBI has laid down some specification on the basis of which banks has decided to issue new cheque books so that the image captured should have all the necessary information needed to process the cheque like MICR code, date of cheque, details of presenting bank etc.

Why only SBI is doing this?

SBI has just given the whole process of Cheque Truncation a start. Being a largest bank of India it has the deepest reach in the country. So this move will push the other banks to speed up the things. Some of the banks have already started the process of migration.

Do customers have to do something for this?

NO. The process for the customers will be the same. This change will be at banker’s end. Customers just have to use the CTS-2010 conformed cheque book and fill in the details properly with no alteration or overwriting. Going forward customers may be asked to fill in the cheque with a dark ink so that the details can be captured properly in the software.

How does it benefit customers?

Well, settling the payments on the basis of electronic images will no doubt speeds up the collection of cheques minimizes the cost of collection and also enhances the customer service.

Cheque Truncation is an important efficiency enhancement initiative in the payment system area, undertaken by RBI. SBI has taken the first step and you will soon find this new system gets implemented across all the banks.

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He’s MBA ( Finance) gold medalist, a CERTIFIED FINANCIAL PLANNER, Chartered Trust and Estate Planner and SEBI Registered Investment adviser. He has authored a Book in collaboration with CNBC TV 18 Network 18 bestesellers , tiltled "The Art of Being Good with Money". An ex banker , having a 17+ years of long experience in financial services industry he manages clients across the globe. He is a regular contributor to various leading Media and publication houses. He has written for Moneycontrol, Dainik bhaskar, Business standard, Live mint, Indian Express, The Tribune etc. He has also appeared in TV shows by Zee Business, ET Money, National Door darshan, Jagran Online. He also delivers training on Various personal finance topics to various corporate houses. You may get in touch with him at [email protected]


  1. Dear Sir,
    What happens to cheques which are dated on or before 31st Dec 2012, which are in the pipeline and awaiting clearance after 1st Jan 2013? Would these cheques get returned? What and where is the drawing line? Some clarification is required.
    KS Ramachandran

    • Mr Ramachandran, this is clear that no cheque will be honoured by SBI after 31st dec’12 if it is NON CTS complied. So whatever cheques you have , present it and get it cleared before 1 jan 2013.


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