The Reserve Bank of India (RBI) has decided to put in place a new system to clear cheques, reducing the clearing time from 2-3 days to merely a few hours. At present, the bank takes 2-3 days to clear a cheque and the same has been a key concern for the transactions that are large in amount, and important as well. Now, with the RBI’s Cheque Truncation System (CTS), the same will become faster starting October 4 this year.
The new system will be put in place in two phases by the central bank. “It has been decided to transition CTS to continuous clearing and settlement on realisation in two phases. Phase 1 shall be implemented on October 4, 2025 and
Phase 2 on January 3, 2026,” the RBI said in an official release.
It has also advised all the banks to make their customers aware about the changes, and prepare themselves to participate in the two phases as mentioned above. The new cheque clearing and payout process will now take a maximum of four hours.
How will the CTS exactly work?
The RBI said there will be a single presentation session from 10 am to 4 pm. During this time, the cheques received by the branches shall be scanned and sent to the clearing house by the banks immediately and continuously during the presentation session.
“The clearing house will in turn release the cheque images to drawee banks on a continuous basis,” it added.
Banks, the RBI said, will be part of a continuous inward processing and the confirmation session will begin at 10 am and close at 7 pm. “For every cheque presented, the drawee bank shall generate either positive confirmation (for honoured cheques) or negative confirmation (for dishonoured cheques),” the central bank said in the release.
Now, under the new system, each cheque will contain the ‘Item Expiry Time’ which indicates the latest time by which confirmation for the presented instrument needs to be provided by the drawee bank.
This processing by drawee banks has to be done continuously throughout the day, on a real time basis as soon as cheque images are received. It would be the drawee banks’ responsibility to inform of positive/negative confirmation to the clearing house immediately after processing.
What time will it take to process cheques under CTS?
The RBI release mentioned that during the phase 1 (From October 4 to January 2, 2026), drawee banks shall be required to confirm (positively / negatively) cheques presented on them latest by end of confirmation session (i.e. 7 pm) else those will be deemed to have been approved and included for settlement.
“Item expiry time for all cheques shall be set as 7:00 PM in phase 1,” it said.
When the banks will begin phase 2 (from January 3, 2026), “the item expiry time of cheques shall be changed to T+3 clear hours” This means if the cheques have been received by drawee banks between 10 am and 11 am, the positive and negative confirmation should be sent by 2 pm (3 hours from 11 am).
Cheques for which confirmation is not provided by the drawee bank in the prescribed 3 hours shall be treated as deemed approved and included for settlement at 2 pm, the bank added.
It further mentioned that starting 11 am, settlement will be arrived every hour till the end of confirmation session, based on the positive confirmations received from drawee banks and cheques considered deemed approved.
After the clearing of the cheque, the presenting bank shall process the same and release the payment to the customers immediately, but not later than 1 hour from successful settlement, which means the complete process will not take only four hours.