RBI’s New Cheque Clearing System: Up to this point, the processing of cheque clearing under India’s Cheque Truncation System (CTS) had been carried out in batches: banks collect cheques, send images in batches, and interbank settlements are made at fixed timings. This method could defer the funds for a day or two, i.e. the time when the deposited cheque would become available for use.
As the trend for digital and instant transfers (such as UPI, RTGS, NEFT) has taken root, cheques-based payments have seemed relatively slow and unprogressive. The RBI’s decision to improve the entire clearing process comes with the aim of facilitating the instant clearance of cheques, lowering the settlement risk for banks, and providing easy access to customers.
From 4th of October 2025, the RBI will be implementing CTS transfer from continuous clearing and settlement on realization model in two phases (namely Phase 1 and Phase 2).
What changed is quite a lot: the first thing that changed is the new process, then there are the rules and changes, furthermore, the impact that the change will make on you as a customer.
Only one cheque presentation window, no stoppage of the flow
Within the new frame work:
A cheque presentation will be a one and only single session starting from 10:00 AM to 4:00 PM i.e. during this time all the actions related to cheques such as scanning, transmitting images of cheques to the clearing house along with MICR data would be continuously performed without breaching the flow while no batches will be used for an image transaction.
After images are received by the clearing house, it will be sending them on-the-go to the drawee bank. That means that the last batch of the end-of-day will no longer be the one to stop and let the clearing house send them.
Beyond 11:00 AM, the hourly settlement cycles will operate giving way to the netting off positive confirmations (cheques accepted) and deemed approvals by the clearing house for interbank settlements.
Response from the drawee bank (confirmation or rejection of the proposal)
The drawee bank is to provide a reply within a set time window is the main alteration introduced by this proposal:
Stage 1 (From 4th October 2025 to 2nd January 2026): The cutoff time for the drawee bank to react (positively or negatively) to the cheques presented by it is 7:00 PM of the presenting day. If no response is given by then, the cheque is considered as approved (i.e., an accepted one) for settlement.
Stage 2 (After 2nd January 2026): The reply time will decrease and be only three hours from the time of presentation. To illustrate, if a cheque comes at 10:00 but 11:00 am, then it should be confirmed by 2:00 pm; if no confirmation is there, then the cheque is deemed approved and included in settlement.
Settlement being done
No later than one hour after the settlement cycle in which your cheque was accepted the presenting bank (i.e. the bank where you deposited the cheque) must credit your account.
Thus, in reality, you may get the money very fast, typically during the day if the drawee bank confirms acceptance (or it is assumed that the acceptance has taken place) at the beginning of an hourly cycle.
Basically though the procedure becomes as close to ‘real-time (or near real-time) as feasible under the banking limitations’.
HDFC & ICICI Bank Cheque Clearance From October 4, Positive Pay System for Safer Transactions
1. Deemed approval in case of non-response
One of the notable elements is the case where if a drawee bank does not issue a confirmation (either positive or negative) within the set time (7 pm in Phase 1, 3 hours in Phase 2), then the cheque is deemed approved (accepted). In this way, the process continues without the unnecessary delays that could have caused by bank slowdowns.
2. Expiry / cheque life (T + “clear hours”)
The new establishment put the time frame for each cheque to be valid (or “expiry”) in terms of hours. If the cheque has not been handled at the end of the expiry window, the latter should revoke. In Phase 2, the “expiry time” equates to T + 3 clear hours.
This means that if the procedure has not been carried out in due time, the presenting bank will no longer be allowed to push the cheque through.
3. Positive Pay requirement
To enhance fraud prevention, many banks are making Positive Pay mandatory (at least for high-value cheques). Through Positive Pay, the issuing party of the cheque has to provide certain details (the cheque number, date, amount, beneficiary name) upon release so that the data is matched during the presentation of the cheque. Thereby, if there is a mismatch, the cheque can be flagged or stopped altogether.
For instance, HDFC and ICICI have already declared that Positive Pay will be in place for cheques over ₹5 lakh.
4. Guidelines on cheque writing / alterations
The existing rules of the RBI that still hold ground:
No alterations: Cheques should have no alterations (except date). In case any change is necessary, a new cheque should be issued.
Permanent, image-friendly ink should be used: Customers are encouraged to use permanent ink with good contrast for the cheques that are scanned and the images are used for the entire clearing process to guarantee clarity in the scanned images.
On-time deposit: Cheques should be deposited before the bank’s cut-off time so that the presentation window of 10:00 AM–4:00 PM is observed. If you deposit after 4 pm, your cheque might wait for the next day’s cycle. (This is implicit in the new design.)
Compliance across grids: The new system has to be implemented by all banks connected to the three national clearing grids (Delhi, Mumbai, Chennai).
Since such a huge change of this nature cannot be instant, the RBI has followed a phased approach:
Phase 1 (Oct 4, 2025 to Jan 2, 2026): 7 pm deadline, auto-approval in the event of no response.
Phase 2 (from Jan 3, 2026): Ambit shrinks, 3-hour window, expiry times, quicker movement.
To make sure you benefit from the new system, here are steps you might want to take:
1. If you want to be sure your cheques will be cleared during the continuous clearing cycle, then you should deposit them between 10 AM and 4 PM.
2. If your bank supports or requires the Positive Pay system, then you should definitely use it. If you are the issuer of high-value cheques, then make sure that you comply with the data submission requirements.
3. Accuracy in cheque writing is a must. Make sure that there are no overwriting, the handwriting is clear, and the details are correct.
4. When you write a cheque, make sure that there is enough money in the account to honour it.
5. Keep an eye on your bank’s internal cut-off policy. Even if the clearing cycle is faster, there may still be internal deadlines for accepting cheque deposits at banks.
6. Get ready for the change by learning how your bank will communicate and implement it. A lot of banks (such as HDFC, ICICI) are already advising their customers about it.
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