What is Cheque Truncation ?
Truncation is the process of stopping the flow of the physical cheque issued by a drawerto the drawee branch. The physical instrument will be truncated at some point en-routeto the drawee branch and an electronic image of the cheque would be sent to thedrawee branch along with the relevant information like the MICR fields, date ofpresentation, presenting banks etc. Thus with the implementation of cheque truncation,the need to move the physical instruments across branches would not be required,except in exceptional circumstances. This would effectively reduce the time required forpayment of cheques, the associated cost of transit and delay in processing, etc., thusspeeding up the process of collection or realization of the cheques.
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