Cheque Truncation System (CTS) is an image based cheque clearing system to speed up the process of clearing the cheques. Cheque truncation means stopping the flow of the physical cheque issued by a drawer to the drawee branch. CTS of bank sends electronic cheques images to drawee branch for payment through the clearing house. The intruders may damage the data and can degrade the quality of cheque image or can duplicate cheque image. Therefore there is necessity of security and copyright protection. In this paper, Least Significant Bit Watermarking Technique is discussed. By using this watermarking technique, the bank cheques can be protected from the intruders who can damage the cheque while transferring to drawee bank.

Keywords Watermarking; Least Significant Bit; Cheque Truncation system; Cheque frauds.