Cheque clearance on the same day: How will RBI’s continuous clearing system work from October 4?
Cheques processed under the new system can be cleared within hours, enabling same-day fund transfers for eligible transactions.
Will RBI’s new cheque payment system from October 4th will clear payments within hours? Yes, the system is designed to clear payments within hours.
Introduction:
1. Currently, the banking network’s Cheque Truncation System (CTS) follows a batch-based process.
2. In August, the Reserve Bank of India (RBI) introduced a faster cheque clearance mechanism aimed at reducing the settlement time to just a few hours, from up to two working days.
How does CTS work currently?
1. The CTS is a digital system used by banks to process and clear cheques. Under this, a cheque is scanned and sent electronically to the drawee bank instead of physical transportation.
2. At present, it works in batches, such as the morning batch, afternoon batch and evening batch. So, the cheques deposited before the cut-off time are included in that batch and sent for processing.
3. This causes delays, as if you deposit late in the day, your cheque might get processed the next business day.
What is continuous clearing?
1. The RBI has moved from CTS to a continuous clearing and settlement-on-realisation model under which cheques will be processed as and when they are deposited.
2. As per the new continuous clearing system, applicable from 4th October, cheques will no longer be processed in fixed batches. Instead, banks will scan and send cheques continuously during the presentation session, between 10 am and 4 pm. Cheques will now be cleared in (almost) real-time, down from the current T+1 days.
3. Within this system, banks will scan and send cheques to the clearing house continuously between 10 am and 4 pm. From 11 am, banks will settle payments hourly. The clearing house, an intermediary that sits between banks and other financial institutions to make sure payments and cheques are verified, will send cheque images to the drawee bank immediately.
4. The drawee bank has to then accept or reject the cheque. If it fails to respond, the cheque will be deemed approved automatically and will be sent for settlement.
Implementation in 2 phases:
1. This will be implemented in two phases. Phase 1 starts from October 4, under which banks will confirm cheques by 7 pm or else they’ll be considered as approved.
2. Phase two starts on January 3, 2026, under which banks will have to confirm (accept or reject) the cheques within 3 hours.
3. After the settlement, the presenting banks will release the customer’s funds within one hour.
4. This will be applicable throughout the country. The new rules cover all banks under RBI’s three clearing grids, Delhi, Mumbai and Chennai, which cover all the banks in India.
What is Positive Pay?
1. Positive Pay confirmation is done when a customer re-verifies the information on the cheque electronically.
2. This means that customers must authenticate the details mentioned on the cheque online as well. These details include account number, cheque number, beneficiary name, cheque amount and date.
3. The RBI only protects cheques with Positive Pay confirmation under its dispute resolution mechanism.
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