Mumbai, August 2025 – The Reserve Bank of India (RBI) has announced a significant overhaul of the country’s cheque clearing process, promising to reduce settlement times from days to mere hours. The new system, set to be implemented from October 4, 2025, will shift cheque processing from the existing batch-based method to a continuous, real-time clearing model.

From Delays to Speed – A Major Shift

Under the current Cheque Truncation System (CTS), cheque clearance can take up to two working days, particularly when cheques are deposited late in the day or in non-home branches. The introduction of the upcoming system will streamline this process, ensuring that most cheques are cleared within business hours, with funds being credited to customers’ accounts shortly thereafter.

The transition will occur in two phases:

• Phase 1 (from October 4, 2025):
  Cheques can be presented between 10:00 AM and 4:00 PM. Drawee banks must confirm receipt and clearance by 7:00 PM on the same day. If no response is received, the cheque will be deemed approved and included in that night’s settlement.
• Phase 2 (from January 3, 2026):
  The response window will be reduced to three hours from presentation time. If confirmation is not received within this period, the cheque will be automatically approved.

Digital-First Processing

In the new system, cheques will be scanned at bank branches and transmitted electronically to the clearing house immediately. This eliminates the delays associated with batch processing and ensures that verification and settlement can occur in near-real time.

Customer Benefits and Risk Reduction

Once settlement occurs, presenting banks will be required to credit the customer’s account immediately, and no later than one hour after settlement—subject to fraud and compliance checks.

The faster turnaround not only improves customer convenience but also reduces settlement risks, such as the possibility of dishonoured cheques or fraudulent transactions going undetected for extended periods.

Aligning Cheques with Digital Transfers

Banking experts note that this modernization will bring cheque payments closer to the efficiency of instant digital transfer systems such as NEFT and RTGS, making cheques a more practical option for both individuals and businesses.

The RBI has directed all member banks to upgrade their systems and inform customers in advance to ensure a smooth transition to the new clearing framework.