Cheque settlement to become faster: RBI to roll out hours-long clearance from October 4

The Reserve Bank of India (RBI) will implement a new mechanism for cheque clearance starting October 4, 2025, allowing cheques to be cleared within hours of being presented, instead of the current cycle of up to two working days. The move is aimed at improving the efficiency of the Cheque Truncation System (CTS), reducing settlement risk, and enhancing customer experience.

Under the revamped process, cheques will be scanned, presented, and processed continuously during business hours. This transition will shift CTS from the existing batch-processing method to continuous clearing with “on-realisation-settlement,” ensuring faster confirmation and settlement of cheques.

RBI has outlined a two-phase implementation plan. Phase 1, effective from October 4, 2025, will require drawee banks to confirm, positively or negatively, the status of cheques presented on them by the end of the confirmation session at 7:00 PM. If a drawee bank fails to confirm a cheque within this time, it will be deemed approved and included in the settlement process.

Phase 2, beginning January 3, 2026, will further accelerate the clearing cycle. Under this phase, the item expiry time for cheques will be shortened to three hours from presentation. For example, cheques received between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM. Cheques not confirmed within this timeframe will automatically be considered approved and included in the settlement.

There will be a single presentation session for all banks from 10:00 AM to 4:00 PM. During this session, branches must continuously scan and submit cheques to the clearing house. Upon settlement, the clearing house will share positive and negative confirmation data with the presenting banks, which are required to release payments to customers immediately, but no later than one hour after successful settlement, subject to standard safeguards.

RBI has directed banks to ensure that customers are adequately informed about the changes in the cheque clearing process and to make necessary preparations to participate in continuous clearing from the prescribed dates.

This new system is expected to significantly reduce the cheque clearing time, streamline bank operations, and offer customers faster access to funds. By moving to real-time clearing and settlement, the RBI aims to modernize the traditional cheque processing framework while maintaining security and reducing operational risks for banks.

(With PTI inputs)