CTS Full Form: Cheque Truncation System, Clearing & Positive Pay
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CTS stands for Cheque Truncation System. It is how every cheque in India is cleared today. The bank where you deposit a cheque keeps the paper, scans it, and sends its images and MICR data to the clearing house. The paying bank checks the image and pays or returns it. Once settled, your bank must credit you within one hour.
- Full form
- Cheque Truncation System
- Run by
- NPCI, under RBI rules
- Deposit window
- 9 am – 3 pm (bank working days)
- Credit
- Within 1 hour of settlement
- Cheque valid for
- 3 months from its date
- Positive Pay
- Offered from ₹50,000
What CTS means
"Truncation" means stopping the paper. Earlier, cheques were physically carried from the bank where they were deposited to the bank they were drawn on. Under CTS, the paper stops at the first bank. Only an electronic copy moves on.
Each cheque is captured as three images: front in grey scale, front in black and white, and back in black and white. The bank also reads the MICR code line at the bottom and keys in the amount. This saves the cost and time of moving paper and lets banks automate clearing.
Since 13 Oct 2023 there is one National Grid, managed by the National Grid Clearing House (NGCH) in Chennai. To read the numbers at the bottom of a cheque, see our MICR guide.
How a cheque clears now
Since 4 Oct 2025, CTS runs continuous clearing. Cheques are sent and checked through the day, not in one batch, and money moves only after the paying bank confirms the cheque.
| Step | Time (as on 31 Oct 2026) |
|---|---|
| Banks send cheques for clearing | 9:00 am – 3:00 pm, continuously |
| Paying bank confirms or returns | 9:00 am – 7:00 pm; no answer by 7:00 pm = treated as approved |
| Settlement between banks | Every hour during the confirmation session |
| Credit to you | Immediately, but not later than 1 hour after settlement |
| Holidays | Clearing runs on bank working days only |
What changed: RBI started continuous clearing on 4 Oct 2025 with a 10 am – 4 pm window. On 24 Dec 2025 it moved the windows to those above and postponed Phase 2 (a 3-hour deadline for the paying bank) until further notice.
What a CTS-2010 cheque has
Only cheques that meet the CTS-2010 standard can be cleared. Banks have issued only such cheques since 30 Sep 2012. The standard sets minimum security features and fixed places for each field, so banks can check a cheque from its image. RBI lists these features:
- Paper quality set by the standard
- Watermark in the paper
- Bank's logo in invisible ink
- Void pantograph
- Standard field positions for date, payee, amount and signature
Old non-CTS cheques cannot be presented in CTS; their separate clearing ended on 31 Dec 2018. They remain valid negotiable instruments, but ask your bank for a new cheque book.
Positive Pay System: confirm big cheques in advance
Under the Positive Pay System (PPS), you tell your bank a cheque's key details before it is presented. CTS matches them with the cheque. If anything differs, both banks are alerted. This stops tampered cheques from being paid. It started on 1 Jan 2021.
| Cheque amount | Rule (RBI) |
|---|---|
| Below ₹50,000 | Not required. Your bank may still offer it. |
| ₹50,000 and above | Banks must offer it to all account holders. Using it is your choice. |
| ₹5,00,000 and above | Banks "may consider making it mandatory". Check your bank's rule. |
RBI also says only cheques that follow these instructions are accepted under the dispute resolution mechanism at the CTS grids.
- Write the cheque.
- Before handing it over, send its date, payee name, amount and cheque number to your bank by mobile app, internet banking, SMS or ATM, whichever your bank offers.
- Hand over the cheque. CTS checks it against your details when it is presented.
Depositing or issuing a cheque
- Use permanent ink in a colour that scans clearly. RBI has not fixed any colour.
- No corrections. Any change to the payee name or the amount in words or figures is not accepted. Use a fresh leaf. Only a change to validate the date is allowed.
- Keep enough balance until the cheque is paid.
- Register Positive Pay for cheques of ₹50,000 and above.
- Never sign blank cheques. Don't share photos of signed cheques.
- Check the date. The cheque must be presented within 3 months of its date, and not before it.
- Check the amount in words and figures match and there are no corrections.
- Ask for an acknowledgement at the counter. No branch can refuse one. Drop boxes are also available.
- Charges: no charge for collecting cheques up to ₹1,00,000 into a savings account. Above that, your bank's cheque collection policy applies.
- Need the paper? The bank where the cheque was deposited keeps the physical cheque for 10 years. Your bank can give you a certified image, or ask that bank for the physical cheque. A charge may apply.
Why cheques are returned
If the paying bank returns a cheque, you get a return memo with the reason. These are common reasons from the return-reason list in RBI's CTS procedural guidelines:
| Code | Reason | What to do |
|---|---|---|
| 01 | Funds insufficient | Ask the payer to pay another way or to re-issue. See the legal note below. |
| 02 | Exceeds arrangement | Same as above: the amount is over the payer's allowed limit. |
| 04 | Refer to drawer | Contact the person who wrote the cheque. |
| 10–14 | Signature incomplete, illegible, differs, missing or not as per mandate | Get a fresh, correctly signed cheque. |
| 20 | Payment stopped by drawer | Ask the payer why. |
| 30 / 31 | Post-dated / out of date (stale) | Present on or after the date; get a new cheque if over 3 months old. |
| 34 | Irregularly drawn / amount in words and figures differ | Get a fresh cheque. |
| 39 | Image not clear, present again with paper | Your bank re-presents it with the physical cheque. |
| 50 / 52 | Account closed / no such account | Ask the payer to pay another way. |
Cheque bounce: the legal position
Section 138 of the Negotiable Instruments Act, 1881 makes it an offence when a cheque given to pay a legally enforceable debt is returned for insufficient funds or because it exceeds the arrangement with the bank. It applies only if:
- the cheque was presented within its validity period (3 months under RBI's rules);
- you, as payee, send the drawer a written notice demanding payment within 30 days of learning from the bank that it bounced; and
- the drawer does not pay within 15 days of receiving the notice.
The complaint must then be filed in court within one month. The penalty can be up to 2 years' imprisonment, a fine of up to twice the cheque amount, or both. This is a summary, not legal advice; consult a lawyer for your case.
Problems and complaints
- Credit delayed: once a cheque is settled, your bank must credit you within 1 hour. Ask the branch for the clearing status.
- Cheque lost in clearing: the bank must tell you at once, so you can ask the payer to stop payment and issue a new cheque.
- No reply: complain to your bank first. If it doesn't reply in 30 days, or you are unhappy, complain under RB-IOS at cms.rbi.org.in or call 14448.
History of CTS
CTS starts in New Delhi.
Chennai grid starts.
Banks to issue only CTS-2010 standard cheques.
Mumbai grid starts. Over time every location joins one of the three grids.
Separate clearing for non-CTS cheques ends.
Positive Pay System begins.
The three grids merge into one National Grid, run from Chennai.
Continuous clearing with hourly settlement starts (Phase 1).
Phase 2 postponed until further notice; windows changed to 9 am – 3 pm (deposit) and 9 am – 7 pm (confirmation).
FAQs
What is the full form of CTS?
Cheque Truncation System. It clears cheques using their images and MICR data instead of the paper.
How long does a cheque take to clear?
Usually the same working day if your bank sends it for clearing by 3 pm. The paying bank has until 7 pm to confirm, settlement runs every hour, and your bank must credit you within 1 hour of settlement. Banks' own cut-off times may be earlier.
What is a CTS cheque?
A cheque that meets the CTS-2010 standard: set paper quality, watermark, bank logo in invisible ink, void pantograph and fixed field positions. All cheque books issued since 30 Sep 2012 should comply.
Is Positive Pay compulsory?
Banks must offer it for cheques of ₹50,000 and above, and you choose whether to use it. For ₹5 lakh and above, a bank may make it mandatory, so check your bank's rule.
Can I correct a mistake on a cheque?
No. Under CTS, a cheque with any change to the payee or amount is not accepted. Only a date correction for validation is allowed. Write a new cheque.
Which ink colour should I use?
RBI has not fixed a colour. Use permanent ink in a colour that shows clearly in a scanned image.
Can I get back my physical cheque?
The paper stays with the bank where it was deposited, which keeps it for 10 years. Your bank can give you a certified image, or ask that bank for the physical cheque. A charge may apply.
Does a returned cheque mean a criminal case?
Only in specific cases: under Section 138 of the Negotiable Instruments Act, if it bounced for insufficient funds, the payee sent notice within 30 days and the drawer did not pay within 15 days. Consult a lawyer.
Official sources
- RBI – FAQs on Cheque Clearing (truncation, images, CTS-2010, grids, Positive Pay, ink, charges, 10-year retention) (accessed 31 Oct 2026)
- RBI – Introduction of Continuous Clearing and Settlement on Realisation in CTS (13 Aug 2025) (accessed 31 Oct 2026)
- RBI – Continuous Clearing in CTS: Phase 2 postponed, session timings changed (24 Dec 2025) (accessed 31 Oct 2026)
- RBI – Positive Pay System for Cheque Truncation System (25 Sep 2020) (accessed 31 Oct 2026)
- RBI – Cheque validity reduced to three months from 1 Apr 2012 (4 Nov 2011) (accessed 31 Oct 2026)
- RBI – Procedural Guidelines for Cheque Truncation System, Annexure III: return reason codes (accessed 31 Oct 2026)
- India Code – Negotiable Instruments Act, 1881 (Sections 138 and 142) (accessed 31 Oct 2026)
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