How a cheque travels from your hand to a credited account in hours instead of days â the Cheque Truncation System, Positive Pay, and why some cheques bounce.
The Cheque Truncation System (CTS) is the image-based clearing mechanism used across India â instead of physically transporting a paper cheque between banks, the presenting bank scans it and transmits the electronic image (plus MICR data) to the drawee bank, who validates and either honours or returns it.
CTS eliminates the days it once took to physically move cheques between cities, and standardises a common cheque format (CTS-2010) with enhanced security features â mandatory watermarking, void pantograph, and standard field placement â to reduce fraud and improve image-based fraud detection.
Cheque deposited at payee's bank/branch or via image capture
Image + MICR data sent to the Clearing House/drawee bank
Drawee bank checks signature, funds & Positive Pay match
Funds settled between banks; payee's account credited
Under CTS, most cheques clear on a same-day or next-day basis, with proceeds credited to the payee's account far faster than the multi-day cycle of the pre-CTS era.
Under the Positive Pay System, the account holder issuing a high-value cheque (âš50,000 and above, at the bank's discretion, mandatory beyond âš5 lakh at many banks) proactively confirms key details â cheque number, date, payee name, amount â with the bank through internet banking/mobile app or SMS before the cheque is presented for payment. Any mismatch between what was confirmed and what is presented flags the cheque for closer scrutiny, significantly reducing cheque fraud.
Two parallel transverse lines drawn across a cheque's face, restricting payment to a bank account rather than over the counter in cash â "A/c Payee" crossing further restricts negotiability, ensuring only the named payee can credit it.
Signing on the back of a cheque to transfer the right to receive payment to another person â blank, special, restrictive or conditional, each carrying different legal effect under the Negotiable Instruments Act.
Related deep-dive: See the JAIIB notes on Negotiable Instruments for the CTS-2010 standard and the new 2025-26 clearing rules, with exam-focused MCQs.
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