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The proposed technique is based on extracting the windowed wavelet transform of fault generated transients to distinguish between faults in a busbar protection zone from those outside the zone, particularly in case of early and severe current transformer (CT) saturation. Most given techniques are tending to block the differential measurement during the portion of the cycle that a current transformer is saturated. Some other techniques bring more meaning to the breakpoint settings of the operating characteristic. The traditional differential concept is based on the current magnitude for estimating the restraining and biasing values. The significant imbalance comes from the secondary current of a current transformer with a resistive burden which collapses to zero when saturation occurs and it remains at zero until the time when the next zero crossing would have occurred. The study describes a new technique with improved characteristic and the differential concept does not depend on the current magnitude. The wavelet transform (WT) depends on high frequencies of the faulted signal produced owing to CT saturation. The proposed WT is based on Mexican basis function that was found to be an excellent discriminant for identifying the fault signals during the CT saturation. The time and frequency information during saturation are obtained rather than the current magnitude.