New Mechanism for Cheque Clearance From October: RBI Proposes Faster Settlement
New Mechanism for Cheque Clearance From October: RBI Proposes Faster Settlement
Cheques to be cleared within hours instead of days under new phased guidelines.
The Reserve Bank of India (RBI) has announced a significant overhaul in cheque clearance that will take effect from October 4, 2025. The new mechanism aims to cut settlement time from up to two working days to just a few hours, bringing cheque payments closer to real-time processing.
Currently, under the Cheque Truncation System (CTS), cheques are cleared in one or two days, depending on when they are presented. With the new system, cheques will be scanned, processed, and settled continuously during business hours, eliminating the existing batch-based model.
According to RBI, the initiative is being introduced in two phases:
- Phase 1 (October 4, 2025 – January 2, 2026): Banks must confirm (approve or reject) cheques by 7 pm on the same day. If a bank fails to respond by this deadline, the cheque will automatically be deemed approved and included for settlement.
- Phase 2 (from January 3, 2026):Â Banks will have just three hours to confirm any cheque presented to them. For example, if a cheque is received at 11 am, the bank must confirm it by 2 pm. Failure to do so will again result in automatic approval and clearance.
The RBI has specified a single presentation session between 10 am and 4 pm, during which cheques will be scanned and sent immediately to the clearing house.
The move is expected to improve customer convenience and reduce settlement risks. It will operate alongside existing electronic payment methods such as NEFT, RTGS, and IMPS, which already allow faster digital transactions.
By making cheque settlement nearly real-time, the RBI hopes to modernize cheque usage, providing customers with greater certainty and efficiency in financial transactions.
