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Sujai Adithya
Business Development and Banking & Financial Services Expert
Asked a question last year

What are the functions of Cheque Truncation System (CTS), National Electronic Clearing Service (NECS) and National Payment Corporation of India (NPCI)?

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Sujai Adithya
Business Development and Banking & Financial Services Expert

Cheque Truncation System (CTS):

  • It is a cheque clearing system. Clearinghouse sends the electronic image of the cheque and related information to the paying branch to eliminate the flow of physical cheque. It speeds up the process of collection of cheques.
  • It provides more secure transactions.
  • Reduces the scope for clearing related frauds or loss of instruments in transit.
  • Lowers the cost of collection of cheques.
  • Removes the reconciliation related and logistics-related problems thus benefiting the system as the whole.

National Electronic Clearing Service (NECS):

  • It facilitates credits to bank accounts of multiple customers against a single debit of remitter's account.
  • NECS (Debit) - launched to facilitate multiple debts to destination account holders against a single credit to the sponsor bank.
  • The system has a pan India characteristic leveraging on CBS of member banks, facilitates all CBS bank branches to participate in the system.

National Payment Corporation of India (NPCI):

  • The objective of this newly established company promoted by banks in India, is to build robust and state of the art national level retail electronic payment system infrastructure in the country.
  • NPCI was incorporated in December 2008 and the certificate of commencement of business was issued in April 2009.