Faster Access to Funds for Customers
The Reserve Bank of India (RBI) will roll out a new cheque clearance mechanism from October 4, 2025, enabling cheques to be cleared within hours instead of the current two-working-day cycle. The reform aims to enhance the efficiency of the Cheque Truncation System (CTS), minimise settlement risks, and improve customer experience.
Under this upgraded framework, cheques will be scanned, presented, and processed continuously during business hours. The system will move from the existing batch-processing method to continuous clearing with on-realisation settlement, ensuring faster confirmation and quicker fund availability for customers.
Two-Phase Implementation Plan
The RBI has announced a two-stage rollout.
- Phase 1 – From October 4, 2025:
Drawee banks must confirm the status of cheques—either positive or negative—by 7:00 PM on the same day. If a bank fails to confirm within the stipulated time, the cheque will be deemed approved and included in that day’s settlement.
- Phase 2 – From January 3, 2026:
The clearance window will shrink further. Cheques will need to be confirmed within three hours of presentation. For instance, a cheque presented between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM. If no confirmation is received within this time, the cheque will be automatically treated as approved for settlement.
New Presentation and Settlement Schedule
Under the revamped process, there will be a single presentation session for all banks from 10:00 AM to 4:00 PM. During this period, branches must scan and submit cheques to the clearing house on a continuous basis.
After settlement, the clearing house will provide both positive and negative confirmation data to presenting banks. These banks will then release payments to customers immediately, or within one hour after settlement, subject to necessary safeguards.
Customer Communication and Bank Preparedness
The RBI has instructed all banks to inform their customers about these upcoming changes and to ensure operational readiness for continuous clearing by the implementation dates. Banks are expected to upgrade systems, train staff, and coordinate with the clearing house to meet the new timelines without compromising security.
Benefits of the New System
This modernised cheque clearing mechanism will:
- Reduce clearing time from up to two days to just a few hours.
- Streamline banking operations by eliminating the wait for batch settlements.
- Enhance customer satisfaction through faster fund availability.
- Lower settlement risk by moving towards real-time processing.
By shifting to a real-time confirmation and settlement model, the RBI is not only modernising India’s traditional cheque processing framework but also aligning it with global banking standards. This change promises to improve both operational efficiency for banks and convenience for customers, marking a significant milestone in the country’s payment infrastructure.
