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Major Changes in Cheque Clearing Process

Mumbai: The Reserve Bank of India (RBI) has revealed a significant update: starting October 4, bank cheques will be cleared within just a few hours, a notable reduction from the current timeframe of up to two working days.

This new system will enable banks to scan, present, and process cheques continuously during business hours, effectively shortening the clearing cycle from the existing T+1 days, as stated in a recent circular from the central bank.

Currently, the Cheque Truncation System (CTS) allows for cheque processing within a clearing cycle that can take up to two working days.

The RBI's decision to shift CTS from batch processing to continuous clearing, along with 'on-realisation-settlement', aims to enhance the efficiency of cheque clearing, minimize settlement risks for participants, and improve the overall customer experience.

The transition to continuous clearing and settlement will occur in two phases: Phase 1 will commence on October 4, 2025, followed by Phase 2 on January 3, 2026. A single presentation session is set to run from 10 am to 4 pm.

According to the circular, banks will immediately scan and send cheques to the clearing house during the presentation session.

The clearing house will then continuously release cheque images to the drawee banks. A confirmation session will take place from 10 am to 7 pm, where drawee banks will provide either positive confirmation for honored cheques or negative confirmation for dishonored ones.

During Phase 1, from October 4, 2025, to January 2, 2026, drawee banks are required to confirm presented cheques by 7 pm. If a cheque is not confirmed, it will be deemed approved for settlement.

From January 3, 2026, the expiry time for cheques will be updated to T+3 clear hours in Phase 2.

The RBI has specified that cheques received by drawee banks between 10 am and 11 am must be confirmed by 2 pm. Any cheque lacking confirmation by this time will be considered approved and included for settlement.

The presenting bank will then process the payment and ensure it is released to customers promptly, but no later than one hour after successful settlement, subject to standard safeguards.

Additionally, the RBI has mandated that banks notify customers regarding these changes in the cheque clearing process.