Cheque Truncation
Web-Search ·
What does 'BY INST 123456 : MICR CLG (CTS)' signify on a bank statement?
Web-Search
The term "BY INST 123456 : MICR CLG (CTS)" in a bank statement typically refers to a transaction that has been processed through the Magnetic Ink Character Recognition (MICR) Clearing System, which is part of the Cheque Truncation System (CTS) [1].
Here is some additional information about the Cheque Truncation System (CTS):
-
What is the Cheque Truncation System (CTS)?
The Cheque Truncation System (CTS) is a project initiated by the Reserve Bank of India (RBI) in 2010 to facilitate faster clearing of cheques [2]. It is based on a cheque truncation or online image-based cheque clearing system, where cheque images and MICR data are captured at the collecting bank branch and transmitted electronically [2]. -
How does the Cheque Truncation System work?
In the Cheque Truncation System, the physical cheques issued by a drawer are stopped from flowing to the drawee branch. Instead, the physical instrument is truncated at some point in the route to the drawee branch, and an electronic image of the cheque is sent to the drawee branch along with relevant information such as the MICR fields, date of presentation, and presenting banks [2]. This eliminates the need to physically move the cheques across branches, resulting in a reduction in the time required for payment, cost of transit, and processing delays [2]. -
Benefits of the Cheque Truncation System:
- For banks: The implementation of CTS offers multiple benefits to banks, including a faster clearing cycle, better reconciliation and verification, improved customer service, enhanced operational efficiency, reduced operational risk, centralized image archival systems for easy data storage and retrieval, and a reduction in manual errors [2].
- For customers: Customers benefit from the Cheque Truncation System through enhanced customer satisfaction due to reduced turnaround time, better reconciliation, and fraud prevention [2].
Learn more: