In a bold move to modernize banking, the Reserve Bank of India (RBI) announced a sweeping makeover of the cheque clearing process. Beginning October 4, 2025, cheques will be cleared within hours during business hours—bid farewell to the frustrating two-day wait.
Currently, the Cheque Truncation System (CTS) works on batch processing, clocking up to two working days for clearance. To streamline operations, the RBI is shifting to a “continuous clearing and settlement on realization” model. The change kicks off in two phases: Phase 1 starts October 4, 2025, and Phase 2 launches on January 3, 2026 The Times of IndiaThe Economic TimesIndia Today.
What Phase 1 Brings (Oct 4, 2025 – Jan 2, 2026)
- One presentation session runs from 10:00 AM to 4:00 PM, during which cheques are continuously scanned and sent to the clearing house.
- Drawee banks must confirm—positively (honoured) or negatively (dishonoured)—by 7:00 PM. Missed confirmations are deemed approved and included for settlement automatically.
- This results in same-day settlement, providing faster liquidity for customers The Times of IndiaThe Economic TimesIndia Today.
What Phase 2 Delivers (From Jan 3, 2026)
- Cheques must be confirmed within three hours of presentation. For example, a cheque presented at 11:00 AM must be confirmed by 2:00 PM.
- If confirmation doesn’t come through, the cheque is deemed approved automatically for settlement.
- Settlements occur every hour during business hours, based on confirmed or deemed approvals.
- Once the clearing house finalizes settlement, the presenting bank has up to one hour to credit the customer’s account The Economic TimesIndia TodayThe Tribune.
Why It Matters
This system revolutionizes how swiftly funds are made available, transforming cheque clearance from a multi-day affair to one that happens in hours—or even minutes. It enhances customer convenience, improves fund predictability, and reduces settlement risk for both banks and depositors The Times of IndiaBusiness StandardBusiness Today. If a bank misses a confirmation window, customers are protected from unnecessary delays—that’s a win for accountability and efficiency Business StandardBusiness Today.
What You Should Know
- Banks will notify customers about the change—but keep an eye out for updates and guidance from your bank.
- Cheques deposited before 4:00 PM will likely be cleared the same day (Phase 1), or within a tight 3-hour window in Phase 2.
- This change ushers in a smoother, faster banking era—good news for individuals, businesses, and the overall financial ecosystem.
In short, the RBI’s move ushers in a new era of banking efficiency—cheques that once took two days to clear will now be processed almost in real time.
