Daijiworld Media Network – Mumbai

Mumbai, Aug 17: The Reserve Bank of India (RBI) has announced a landmark reform in cheque clearing by mandating banks to clear cheques within hours, effective from October 4, 2025. This move is aimed at enhancing customer convenience and reducing settlement risks by introducing a faster, near real-time clearing system.

Currently, under the Cheque Truncation System (CTS), cheques take one or two working days to clear depending on the time of presentation. The RBI’s new system will replace batch-wise processing with continuous scanning, verification, and settlement during business hours. This will drastically reduce the clearing cycle from the current T+1 timeline to just a few hours.

The new cheque clearing system will complement existing electronic payment methods such as National Electronic Funds Transfer (NEFT), intended for smaller transfers, and Real Time Gross Settlement (RTGS), suited for larger sums. Both these methods already enable payments within an hour or less depending on the bank’s systems and transaction loads. Additionally, the Immediate Payment Service (IMPS) platform allows instant payments for smaller amounts but charges a fee.

While the RBI has not set a fixed limit for NEFT transfers, banks impose their own caps. For instance, State Bank of India allows NEFT transfers up to Rs 25 lac via retail internet banking, whereas HDFC Bank has limits on transfers to newly added beneficiaries.

The implementation will take place in two phases:

• Phase 1 (October 4, 2025 to January 2, 2026): Banks must approve or reject cheques by 7 pm on the day of presentation. If they fail to respond, the cheque will be deemed approved automatically and cleared that day.
• Phase 2 (from January 3, 2026): Cheques must be confirmed within three hours of receipt. For example, a cheque received between 10 am and 11 am must be cleared or rejected by 2 pm. Failure to respond will again result in automatic approval and clearing.

This modernisation is expected to reduce delays, minimise settlement risks, and align India’s traditional cheque clearing system with its rapidly evolving digital banking infrastructure. It ensures faster access to funds for customers relying on cheques, complementing the country’s growing preference for electronic payments.