RBI's new rules will ensure clearance of cheques within hours

Starting October 4, there's just one big session from 10 am to 4 pm where banks scan and send cheque images to the clearing house right away.

The Reserve Bank of India (RBI) has rolled out new guidelines under the Cheque Truncation System (CTS) for faster clearance of cheques. With CTS, there will be no physical movement of papers, as  the system is based on images and electronic signals. These changes aim to make cheque-processing continuous, with real-time settlements based on actual approvals.

A single, all-day presentation window

Starting October 4, banks will scan and send images of cheques and the Magnetic Ink Character Recognition (MICR) data to the clearing house right away from 10 am to 4 pm. The clearing house will forward these images to the bank that needs to pay (the drawee bank) throughout the day, doing away with the need for the cheque to travel physically, saving costs for banks. At present, cheque clearance through CTS operates in a batch-processing mode.

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Non-stop checking and confirmations

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.

Roll out 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. For example, a cheque arriving between 10 am and 11 am 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. Your bank then credits the account within an hour of settlement.

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What it means for customers?

According to Adhil Shetty, CEO of Bankbazaar.com, the proposed continuous clearing approach will significantly speed up cheque clearance to just a few hours. This is a welcome change, especially with the growing use of digital payment methods like UPI, NEFT, and RTGS. Cheques still remain widely in use 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.

With CTS, physical cheque movement is eliminated, reducing the risk of loss in transit. This system offers several benefits, including faster clearance, shorter clearing cycles, and quicker credits to your account. Depending on the cheque type, clearance can occur on the same day. CTS-compliant cheques provide enhanced security and reduced vulnerability to fraud, say experts.