RBI’s new cheque-clearing system brings speed & uniformity

October 9, 2025 Finance Talk Valli Sarvani

Cheques clear in hours now: RBI’s new system brings speed & uniformity

Starting October 4, 2025, the Reserve Bank of India (RBI) has rolled out a new cheque clearing system that allows funds to be credited or debited within hours, replacing the earlier 1-2 business day timeline.

This upgraded system brings nationwide uniformity, as well as hourly settlements and automatic approvals.

Instead of batch-based processing, banks will now scan and send cheques continuously between 10 am and 4 pm.

Settlements begin from 11 am every hour. The result is near real-time processing, making the entire system faster and more efficient.

Cheques deposited between 10 am and 4 pm will be processed and settled the same day.

After settlement, funds will be credited to the customer’s account within an hour, subject to standard verification and security checks by the bank.

Two-Phase Rollout

Phase 1 (Oct 4, 2025 – Jan 2, 2026):
Banks must confirm cheques by 7 pm, or they will be auto-approved for settlement.
Phase 2 (From Jan 3, 2026):
Banks will have 3 hours to confirm each cheque. For example, a cheque received at 10 am must be confirmed by 2 pm.

Key Benefits

Faster access to money
Uniform clearing speed across all locations
Simplified tracking of cheque status
Reduced settlement risk for banks
Improved business payments and customer convenience

It works as follows:

The drawee bank must respond either positively (honoured) or negatively (dishonoured) during the session.

If it fails to do so within the stipulated time, the cheque is deemed approved.

Background: Evolution of Cheque Clearing

Pre-1980s: Manual processing took 7+ days
1980s: Introduction of MICR reduced local clearing to 1-3 days
2008: Cheque Truncation System (CTS) introduced; clearance within 1 day
2021: Nationwide grid clearing with T+1 settlement
2025: Now, same-day settlement in hours

This latest move by the RBI marks a major leap in India’s payment infrastructure, offering both speed and transparency to bank customers across the country.

Image by Simi from Pixahive (Free for commercial use / CC0 Public Domain)

Image Published on October 11, 2020