From October 4, banks will be clearing cheques the same day, as required by the Reserve Bank of India's updated settlement framework that aims to speed up cheque settlement and enhance payment security.
Faster, safer?
At present, cheque clearance through Cheque Truncation System (CTS) works in a batch-processing mode.
Banks have announced that cheques deposited from October 4 will be cleared within a few hours on the same working day.
The banks will scan and send images of cheques and the Magnetic Ink Character Recognition (MICR) data to the clearing house. The clearing house will forward these images to the bank that needs to pay (the drawee bank) throughout the day.
Longer confirmation window
Once the drawee bank gets the image of the cheque, it has to act fast. The confirmation window runs from 10 am to 7 pm.
Every cheque comes with an "expiry time". Banks will process these in real-time and send back the info to the clearing house immediately.
How is RBI rolling this out?
The RBI is rolling out the new system in two phases.
Phase 1 (October 4-January 2, 2026): All cheques get a 7 pm deadline to confirm. If they don't, the cheque is automatically approved and settled.
Phase 2 (from January 3): Banks will have just three hours to clear and respond. A cheque arriving between 10 am and 11 am, for instance, must be confirmed by 2 pm.
Cheques for which confirmation is not provided by the drawee bank in three hours shall be treated as deemed approved and settled at 2 pm. This pushes banks to be efficient in cheque clearance and you get your money faster.
Once settlement is done, the clearing house tells your bank (the presenting bank) about the approvals or rejections. The bank then credits the amount within an hour of settlement.
What is Positive Pay system and how does it protect your cheques?
Banks recommend using the Positive Pay System for cheques over Rs 50,000 to enhance security. For cheques over Rs 5 lakh, Positive Pay verification is compulsory; otherwise, the cheque will be returned.
Customers must share key details (account number, cheque number, date, amount, and beneficiary's name) with the bank in advance. The bank then cross-checks these details when the cheque is presented, ensuring clearance only if the information matches.
The RBI guidelines provide dispute resolution protection only for verified cheques under this system.
What do customers need to do?
To prevent cheque bounces, customers should keep sufficient account balances. File cheque details accurately to prevent delays or rejections.
What it means for customers?
According to Bankbazaar.com CEO Adhil Shetty, the continuous clearing approach is a welcome change, especially with the growing use of digital payment methods such as UPI, NEFT, and RTGS. Cheques are still widely used and faster clearance will improve customer experience and reduce risks associated with delayed settlements.
Cheques will be scanned, presented and cleared continuously throughout business hours, making the process more efficient.
Businesses can manage cash flow better and the system reduces errors and delays.
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