TV
The Reserve Bank of India (RBI) has issued fresh guidelines to speed up cheque settlements through the Cheque Truncation System (CTS). Under this mechanism, there will be no physical movement of cheques; instead, banks will use scanned images and electronic data for processing, enabling quicker and more efficient transactions.
All-Day Presentation Window
From October 4, 2025, banks will be required to scan cheques and forward their images, along with Magnetic Ink Character Recognition (MICR) details, to the clearing house between 10 am and 4 pm. The clearing house will then send these images to the respective drawee bank throughout the day. This marks a shift from the existing batch-based clearance system. Each cheque will also carry an “expiry time,” ensuring real-time approvals.
Two-Phase Implementation
Phase 1 (October 4, 2025 – January 2, 2026): Banks must provide cheque confirmation by 7 pm. If they fail to respond, the cheque will be deemed approved and automatically settled.
Phase 2 (From January 3, 2026): The response time is reduced to three hours. For instance, a cheque presented at 10 am must be acted upon by 2 pm. Non-response within this window will result in automatic approval.
Faster Settlements for Customers
Once the settlement is processed, the clearing house will notify the presenting bank, which must credit the customer’s account within one hour.
Benefits for Customers & Businesses
Experts highlight that this move will bring cheque clearance down to just a few hours, improving cash flow management for businesses and providing faster access to funds for individuals. The system also eliminates risks linked to physical cheque movement, reduces errors, and minimizes the chances of fraud.
According to banking experts, CTS will not only shorten clearing cycles but also enhance security, offering customers quicker credits, safer processing, and greater convenience—even as digital modes like UPI, NEFT, and RTGS continue to expand.
