No More 2-Day Wait, RBI's New Rules To Ensure Cheque Clearance Within Hours

Bank customers will no longer have to wait two working days for cheque deposits to clear. Starting October 4, the Reserve Bank of India (RBI) will implement a faster settlement system promising funds in only a few hours.

The central bank has announced that the Cheque Truncation System (CTS) will shift from batch processing to a continuous clearing and settlement model. The reform, titled 'Continuous Clearing and Settlement on Realisation', will be implemented in two phases.

"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.

Phase 1: From October 4, 2025

Cheques presented between 10 am and 4 pm will be scanned by banks and sent to the clearing house immediately.

The drawee bank must confirm the status of cheques by 7 pm the same day.

If a response is not received by the deadline, the cheque will be treated as approved and settled automatically.

Phase 2: From January 3, 2026

The clearance window will be reduced to a three-hour turnaround.

For example, cheques received between 10 am and 11 am must be cleared or declined by 2 pm.

Once settlement is complete, presenting banks must credit customer accounts within one hour, subject to standard checks.

The RBI said the new system will give customers faster access to funds, reduce settlement risks for banks, and improve overall transaction efficiency. Currently, cheque settlements can take up to two working days, delaying fund availability.

Banks have been instructed to prepare for the transition and inform customers about the new timelines. The apex bank said the change will align cheque processing with modern digital banking practices, ensuring smoother and quicker fund transfers.