RBI to Revolutionize Cheque Clearing: Multi-Hour Settlements Starting Oct 4, 2025

The Reserve Bank of India (RBI) announced a sweeping upgrade to the Cheque Truncation System (CTS), set to roll out from October 4, 2025. This landmark reform aims to streamline operations, reduce settlement risk, and vastly improve customer convenience by cutting the cheque clearance period from up to two working days to just a few hours.

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The reform will be implemented through a two-phase approach:

• Phase 1 (October 4, 2025 – January 2, 2026):
  Cheques presented between 10 AM and 4 PM will be scanned and processed continuously. Drawee banks must provide confirmation—either positive or negative—by 7 PM. Failure to respond will result in deemed approval and automatic inclusion in settlement.

• Phase 2 (from January 3, 2026):
  A tighter T+3-hours confirmation window will be enforced. For instance, a cheque presented at 10 AM must be confirmed by 1 PM; if not, it’s treated as approved. Settlements will occur hourly starting from 11 AM, and presenting banks must credit funds to customer accounts within one hour of settlement, subject to standard safeguards.

This shift from batch-based clearing to continuous, real-time processing promises to deliver near-instant liquidity to account holders, especially beneficial for businesses and individuals relying on swift cheque settlements.

The RBI has emphasized the need for banks to notify customers about these changes and ensure readiness for the technical and operational aspects of the transition.

As cheque-based transactions approach the speed and transparency of electronic payments, this initiative marks a significant leap in modernizing India’s banking infrastructure.