In indian banking system there are millions cheques are cleared in a year, so to make this system efficient, RBI introduce this system.
How Does it work-
Its a very simple & hassale free process, till 31-dec-2012 all cheques have to be moved physically to the concerned bank branch for clearance e,g, suppose you place a cheque of bank A to your bank B then your bank B send it physically to the bank A for clearance and may take days or weeks or some times a month, so the person who give you cheque take the benefit of money for 15 days.
Now what banks do from 1-jan-2012, introduce a CTS-2012 standard cheque books which got magnetic ink on it, now when some one place a cheque in bank, bank will scan it and send it to concerned bank branch over a MICR technology for clearance, this may take arounds minutes to got that cheque in clearance system & chque will clear in one days.
So by this system, the floating time of cheque come down to one day and the system is made fast & easy to use for both customer and banks.