Starting October 4, the Reserve Bank of India (RBI) will implement a significant update to its cheque clearance system, aimed at enhancing efficiency for account holders across the country. This change, announced by the RBI, is expected to simplify the process and drastically reduce clearance times, making banking transactions smoother and faster.
The Reserve Bank of India (RBI) is set to revolutionize cheque processing, cutting clearance times from two working days to just a few hours, effective October 4, 2025. This overhaul, announced by the RBI, will transition the Cheque Truncation System (CTS) from batch processing to a continuous clearing and settlement model, enhancing efficiency and customer experience.
Under the new system, named Continuous Clearing and Settlement on Realisation, banks will process cheques in real-time during a designated window from 10:00 AM to 4:00 PM. Cheques deposited during these hours will be scanned and sent to the clearing house immediately. The drawee bank, responsible for payment, must confirm the cheque’s status either approved or rejected by 7:00 PM on the same day. If no response is received by this deadline, the cheque will be automatically deemed approved and settled, ensuring swift fund availability.
The RBI has outlined a two-phase implementation. Phase 1, starting October 4, 2025, establishes the continuous clearing framework with the 7:00 PM confirmation cutoff. Phase 2, beginning January 3, 2026, will further accelerate the process by requiring drawee banks to confirm cheque status within three hours of presentation. For example, a cheque deposited between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM, or it will be auto-approved for settlement.
This reform aims to streamline banking operations, reduce settlement risks, and provide faster access to funds for customers. The RBI has instructed banks to prepare for the transition and inform customers about the updated timelines to ensure a smooth shift. The move brings cheque processing closer to the speed of digital payment systems like NEFT and RTGS, marking a significant step in modernizing India’s banking infrastructure.
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