CHEQUE TRUNCATION SYSTEM (CTS)
Background

The Royal Monetary Authority with the financial assistance from the Asian Development Bank (ADB) introduced the Cheque Truncation System (CTS) in April 2007.

The CTS was introduced to :

The modus operandi of the CTS operates on the basis of cheque images and electronic data received from the service centers/regional Clearing House (RCH) strategically located across the country, and is settled through a central Clearing House located in the RMA, Thimphu. The physical movement of cheque is restricted up to a designated service center where the cheque is truncated and the corresponding electronically captured image is used as the substitute for processing clearing and settlement.

The transaction life-cycle for a cheque to be cleared is on a T + 1 basis after the cheque is physically delivered/presented at the service center. This is made possible through the service center located within the vicinity of local banks to cater to their interbank clearing needs. However, with only four service centers available across the country, the movement of cheque originating from outside the geographical periphery of the service centers is being delivered through the postal courier services. In such cases, the time period from the collecting banks extends from T + 1, 2, 3… depending on the proximity and time for the cheque to reach at the nearest service center.

CTS SETUP

The four service centers/RCHs are located in Thimphu, Phuentsholing, Gelephu and Mongar. The service center in Thimphu records all time highest number of interbank cheque followed by Phuentsholing, Gelephu and Mongar respectively.

By viewing and analyzing the data representations given below, it is plausible to ascertain that the cheque volume from Thimphu RCH and Phuentsholing RCH collectively accounts for more than 80% of the total volume. Although the figure contributed by Gelephu RCH and Mongar RCH is minuscule, the important role it plays in the overall settlement of clearing outstation cheques cannot be undermined.

CHEQUE VOLUME STATISTICS

The average number of cheques presented on a daily basis is about 900. The following table represents the distribution pattern of the average volume amongst the four service centers:

Sl. No RCH Average Cheque Volume (Daily-Basis)
1 Thimphu 600
2 Phuentsholing 200
3 Gelephu 60
4 Mongar 40
Total 900