The Reserve Bank of India (RBI) has announced a major upgrade to the Cheque Truncation System (CTS) that will enable cheque clearance within a few hours instead of the current next-day settlement. The new continuous clearing and settlement-on-realisation model will roll out in two phases, starting October 4, 2025.
This move is aimed at speeding up cheque transactions, improving customer convenience, and streamlining banking operations across India.
What is Changing in Cheque Clearing?
Under the upgraded system, cheques will be scanned, presented, and processed on a continuous basis during business hours — meaning customers will no longer have to wait until the next day for clearance.
The RBI’s circular, following its Statement on Developmental and Regulatory Policies on August 8, 2024, directs all banks to inform customers about the new process and be ready for implementation on the prescribed dates.
Key Features of the New System
- Single Daily Presentation Window: From 10:00 PM to 4:00 PM, banks must scan and send cheques to the clearing house continuously.
- Real-Time Processing: The clearing house will send cheque images to the drawee (paying) banks in real time.
- Continuous Confirmation: Drawee banks will process cheques between 10:00 PM and 7:00 PM, giving either positive confirmation (honoured) or negative confirmation (dishonoured).
Phase-Wise Implementation Timeline
Phase 1 (October 4, 2025 – January 2, 2026)
- Expiry time for confirmation: 7:00 PM.
- Any cheque not confirmed by this time will be deemed approved and included for settlement.
Phase 2 (From January 3, 2026)
- Drawee banks must process and confirm cheques within 3 hours of receipt.
- Example: A cheque received between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM.
- Cheques without confirmation within the 3-hour window will be treated as approved and settled accordingly.
Settlement Process and Customer Impact
- Hourly Settlements: From 11:00 AM to 7:00 PM, settlements will occur every hour based on positive confirmations and deemed approvals.
- Immediate Fund Release: Once settlement is complete, the presenting bank must release funds to the customer immediately — and no later than one hour after settlement, subject to standard safeguards.
- Faster Access to Funds: Customers will benefit from reduced waiting time for cheque clearance, enhancing liquidity and convenience.
Why This Change Matters
This upgrade to the Cheque Truncation System marks a significant shift from the current batch-based settlement to a real-time, continuous clearing model. It means:
- Quicker fund availability for cheque holders.
- Improved banking efficiency for both customers and institutions.
- Stronger transaction transparency with real-time updates.