RBI postpones Phase 2 rollout of faster cheque clearing; Phase 1 to continue for now

The Reserve Bank of India (RBI) on Wednesday said it has postponed the rollout of Phase 2 of the cheque clearing system until further notice, giving banks additional time to streamline their operations. The earlier rollout date was January 3, 2026. 

Earlier, lenders had been directed to shift to a continuous cheque clearing system from October 4, 2025, replacing the traditional fixed batch format to improve customer convenience.

In a circular issued on December 24, the RBI said the second phase of the Continuous Clearing and Settlement (CCS) framework has been postponed, while Phase 1 will continue to operate as currently implemented. The RBI did not specify the reasons for the delay and said a revised timeline would be communicated separately.

Explaining the changes, the RBI said, “Implementation of Phase 2 is being postponed, until further notice, to allow more time for banks to streamline their operations. Also, the timing of the presentation session is modified to 09:00 AM to 03:00 PM and the timing of the confirmation session is modified to 09:00 AM to 07:00 PM.”

Alongside the postponement, the RBI has also revised cheque processing timelines. The cheque presentation window will now remain open from 9 am to 3 pm, while banks can approve or reject cheques between 9 am and 7 pm. These changes are aimed at providing operational clarity while Phase 1 remains in force.

What changed under Phase 1

The CCS framework was introduced under the Cheque Truncation System (CTS) to move cheque clearing away from the traditional batch-based model. Under CTS, physical movement of cheques is eliminated, with banks exchanging digital images and electronic data instead.

Implemented from October 4, 2025, Phase 1 introduced a single, continuous presentation window during the day. Banks now scan cheques and transmit their images and MICR data to the clearing house as they are received, rather than waiting for fixed clearing cycles.

Once the drawee bank receives the cheque image, it verifies the details and sends an electronic approval or rejection. If no response is sent by the end of the confirmation window, the cheque is deemed approved and settled automatically.

What Phase 2 was meant to change

Phase 2 was designed to make cheque clearing even faster and more time-bound. Under the proposal, banks would have been required to approve or reject cheques within three hours of receiving the cheque image.

Failure to respond within this period would have resulted in automatic approval and settlement, forcing banks to tighten internal processing timelines. For customers, this would have meant quicker access to funds and greater certainty around cheque realisation.

With Phase 2 deferred, the most stringent element of the new cheque clearing system will not be implemented yet. Cheque processing will continue under the existing Phase 1 framework, without the three-hour deadline. The RBI said it will announce a fresh rollout date for Phase 2 in due course, keeping banks and customers on the current system until further notice.