(1) Cheque Truncation is asystem of cheque clearing andsettlement between banksbased on electronic data/imagesor both without physicalexchange of instrument.Cheque Truncation speeds upthe process of collection ofcheques resulting in betterservice to customers, reducesthe scope for clearing-relatedfrauds or loss of instrumentsin transit, lowers the cost ofcollection of cheques, and removesreconciliation-relatedand logistics-related problems.