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Mumbai: In a big sigh of relief for the general public, the Reserve Bank of India (RBI) announced to implement a system from October 4, 2025 which would ensure that cheques are cleared within hours of being presented to banks. Currently, the current time period of cheque clearance is up to two working days.
The new mechanism of the Reserve Bank calls for banks to scan the cheques, presented, and passed in a few hours and on a continuous basis during business hours. Notably, the cheque clearing cycle will be reduced from the present T+1 days to a few hours, the RBI stated.
The current Cheque Truncation System (CTS) processes cheques with a clearing cycle of up to two working days.
The central banking authority is introducing the new system with an aim to enhance customer experience by speeding up the cheque clearing process and reducing settlement risk for participants. The RBI has decided to transition CTS from the current approach of batch processing to continuous clearing with 'on-realisation-settlement'.
The Reserve Bank of India released a circular for introduction of Continuous Clearing and Settlement on Realisation in CTS.
"It has been decided to transition CTS to continuous clearing and settlement on realisation in two phases. Phase 1 shall be implemented on October 4, 2025 and Phase 2 on January 3, 2026," it said.
The circular informed that a single presentation session from 10:00 AM to 4:00 PM will be in place. The bank branches will be mandated to scan the receiving cheques and send them to the clearing house by the banks immediately and continuously during the presentation session.
"For every cheque presented, the drawee bank shall generate either positive confirmation (for honoured cheques) or negative confirmation (for dishonoured cheques)," it said.
Phase 1: October 4, 2025 to January 2, 2026:
The RBI rules state that the Drawee banks will be required to confirm (positively/negatively) cheques presented, latest by the end of the confirmation session (7:00 PM), else the cheques will be considered to have been approved and included for settlement.
Phase 2: January 3, 2026
The phase 2 will see the expiry time of cheques changing to T+3 clear hours.
To explain the entire process, RBI provided an example saying that the cheques received by drawee banks between 10:00 AM and 11:00 AM will have to be confirmed positively or negatively by them by 2:00 PM (3 hours from 11:00 AM).
It further said that if the drawee bank fails to confirm in the prescribed 3 hours, the cheque shall be treated as deemed approved and included for settlement at 2:00 PM.
"The presenting bank shall process the same and release the payment to the customers immediately, but not later than 1 hour from successful settlement, subject to usual safeguards," it said.
RBI asked the banks to educate the customers about the changes in the cheque clearing process. The central banking authority also directed the banks to be in readiness to participate in continuous clearing in CTS on the prescribed dates.
