The Reserve Bank of India (RBI) has announced a landmark reform that is set to revolutionize cheque processing in India. Beginning October 4, 2025, cheques will be cleared within mere hours, replacing the current system that often takes up to two working days. This sweeping change, which will unfold in two phases, promises not only faster fund realization but also greater convenience and reduced risk for both individuals and businesses.
1. From T+1 Days to Real-Time Clearing
Currently, cheque processing under the Cheque Truncation System (CTS) involves batch processing, leading to delays in clearance—typically one working day (T+1), and sometimes even two, depending on bank practices.
Under the new regime starting October 4, 2025, CTS will shift to a real‐time framework called Continuous Clearing and Settlement on Realisation. Cheques deposited during business hours will be scanned, presented, and processed continuously, drastically shrinking the clearance window to just a few hours.
2. Phase 1: October 4, 2025 – January 2, 2026
This initial rollout introduces streamlined processing and clearer deadlines:
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Presentation window: Cheques can be submitted between 10:00 AM and 4:00 PM. During these hours, banks scan and immediately send cheque images to the clearing house.
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Confirmation timeline: Drawee banks must issue either a positive confirmation (honour cheque) or negative confirmation (dishonour) by 7:00 PM the same day. Failure to respond means the cheque is deemed approved and included in settlement.
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Once settlement concludes, presenting banks receive the confirmation details and must credit the funds to customers immediately, and no later than one hour post-settlement (subject to standard safeguards).
This setup dramatically improves turnaround, with many cheques honoured on the same day, by evening.
3. Phase 2: From January 3, 2026
The second phase steps up the pace further:
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Three-hour confirmation window: Drawee banks now have only three hours from the time the cheque is presented (e.g., if presented between 10–11 AM, confirmation must be by 2 PM).
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Missing this deadline means the cheque is automatically approved for settlement.
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Hourly settlements: Settlement cycles will be hourly—from 11 AM to 7 PM—meaning that confirmed or deemed-approved cheques are settled within the hour in which they clear.
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Presenting banks must release funds to customers within one hour of settlement.
In essence, a cheque deposited in the late morning could be fully settled and credited by the afternoon—an unprecedented improvement in speed.
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4. Why This Matters: The Benefits
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Faster liquidity: Funds from cheque deposits will be available much sooner—often the same day.
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Greater predictability: Clear confirmation timelines reduce uncertainty for businesses, freelancers, and individuals relying on cheque-based payments.
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Enhanced accountability: With strict cutoffs, drawee banks are discouraged from delaying responses, supporting smoother transaction cycles.
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Lower operational risk: Faster clearances reduce systemic and settlement risks for both banks and customers.
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Improved customer experience: This transition aligns cheque clearing with the speed of digital payments, reinforcing trust and reliability.
5. What You Need to Know as a Customer
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Mark the dates: Be ready for faster cheque clearing starting October 4, 2025, and even faster from January 3, 2026.
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Bank communications: RBI has directed banks to inform clients about these changes and prepare internal systems accordingly.
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Expect same-day outcomes: Cheques deposited before 4 PM should either be confirmed or automatically cleared that evening under Phase 1. Under Phase 2, much of this processing may even wrap up by mid-afternoon.
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Adjust expectations: If your funds aren’t credited immediately and the bank delays past deadlines, the system will default to clearing the cheque—so funds should arrive shortly.
6. In Summary – Timeline Recap
| Phase | Effective Date | Confirmation Deadline | Settlement Timeline |
|---|---|---|---|
| Phase 1 | October 4, 2025 | By 7:00 PM that day, or auto-approved | Funds credited within 1 hr post-settlement |
| Phase 2 | January 3, 2026 | Within 3 hours of presentation, or auto-approved | Hourly settlements from 11 AM–7 PM; funds credited within 1 hour |
7. Conclusion
The RBI’s move to enable hourly cheque clearing is nothing short of a leap forward. It reflects how payment systems are adapting to ever-increasing demands for speed, reliability, and efficiency. While digital payments have soared in recent years, cheques still play a vital role—especially in business, government, and larger transactions. By modernizing CTS, the RBI ensures that the oldest payment instrument remains relevant and competitive.
For customers, the transition signals that cheque payments can soon match the immediacy of digital options. For banks, it means upgrading their infrastructure and workflows to meet the new market expectation. Ultimately, it’s a win-win—faster funds for users and lower settlement risk for all.
