Wavelet analysis has attracted attention for its ability to analyze rapidly changing transient signals. The analysis of non-stationary signals measured by the protection devices using the conventional techniques is very limited. The proposed technique is based on extracting the windowed wavelet transform of fault generated transients so as to distinguish between faults in a busbar protection zone from those outside the zone, particularly in case of early and severe CT saturation. The paper describes a digital busbars protection technique. The absolute sum of the differential current signal is computed. In the proposed technique, the Wavelet Transform (WT) depends on the spikes output from the faulted signal induced by CT saturation not the magnitude value of the signal. The impact of WT in case of external faults associated with CT saturation is far less than bus faults. One can predict that the magnitude of the WT in case of out of bus zone faults and CT saturation is far less than spikes produced by the bus faults. The technique uses the Meyer wavelet function to distinguish faults in a busbar protection zone from those outside the zone. The proposed wavelet transform approach based on Meyer basis function is found to be an excellent discriminant for identifying the fault signals during the CT saturation and ratio mismatch.