Banks to clear cheques within hours from October 4: RBI
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Mumbai: The Reserve Bank of India (RBI) has announced that banks will be required to clear cheques within a few hours from October 4, replacing the current clearance period of up to two working days.
According to an RBI circular, the new system will require banks to scan, present and process cheques on a continuous basis during business hours, reducing the clearing cycle from the present T+1 days. The move aims to improve the efficiency of cheque processing, lower settlement risks and enhance customer experience.
At present, the Cheque Truncation System (CTS) operates in batches, with cheques taking up to two days to clear. The RBI will now shift to a continuous clearing and “on-realization-settlement” model in two phases, Phase 1 from October 4, 2025, and Phase 2 from January 3, 2026.
Under the new mechanism, cheques received by bank branches will be scanned and sent to the clearing house immediately during the presentation session, scheduled from 10 am to 4 pm. The clearing house will release the images to drawee banks on a continuous basis, and confirmation, either positive (honored) or negative (dishonored), must be provided between 10 am and 7 pm.
In Phase 1, drawee banks will have until 7 pm to confirm cheques presented to them. If no confirmation is received, the cheque will be deemed approved for settlement.
From January 3, 2026, in Phase 2, the clearance time will be reduced further to T+3 clear hours. For example, cheques received between 10 am and 11 am must be confirmed by 2 pm, failing which they will be automatically approved and included in the 2 pm settlement.
The presenting bank will release the payment to the customer immediately after settlement, and no later than one hour afterwards, subject to standard safeguards.
The RBI has directed banks to inform customers of the revised cheque clearing timelines ahead of implementation.
