The frequency of clearance of cheque was reduced from three sessions in a week to two days (Mondays and Fridays only) in Chennai.
Earlier, the Reserve Bank of India (RBI) started the process of migration to CTS cheques in New Delhi and Chennai from 24 September 2011.
Significance of CTS cheques
The CTS system will take transactions online. In the bank where a deposit is made will scan cheque image data and bank will make an instant electronic transmission of the money to the recipient.
The truncation in CTS puts a stop to physical transfer of cheques from one branch to another. Banks will truncate the physical instrument and instead of dispatching the cheque itself, will send an electronic image of the cheque to the banks where they are to be credited.
The system will reduce transaction time from a few days to a few minutes.
Also, CTS system will enhance security and reduce the cost of transferring and processing cheques.
Magnetic Ink Character Recognition (MICR)
Magnetic ink character recognition (MICR) is a character-recognition technology used mainly by the banking industry to ease the processing and clearance of cheques and other documents.
The MICR encoding known as the MICR line is at the bottom of cheques which includes bank code, bank account number, cheque number, cheque amount, and a control indicator.
The MICR E-13B font has been adopted as the international standard in ISO 1004:1995.