MUMBAI: The Reserve Bank (RBI) has deferred the rollout of the phase 2 of its faster cheque clearance framework, which was scheduled to be effect January 3, 2026, under which banks were to approve/reject cheques within three hours of receiving them. The new faster cheque clearing system, with nationwide uniformity and much shorter time lag, was rolled out from October 4 this year in a phased manned, allowing credit/debit into/from an account within a few hours.
According to the Reserve Bank, the new cheque clearing allows banks a continuous, time-bound processing of the instrument. This significant upgrade means funds could reach accounts in just hours, a major improvement over the current one-two business days.
The new system not only made clearing speed uniform nationwide, it also made tracking the status of cheques much simpler and more transparent apart from reducing settlement risks for banks and improves overall efficiency. With the delayed rollout of the still faster clerance, banks have more breathing space to get themselves prepared. But this does not means, cheques would take much longer as the phase 1 rollout which is in place itself is a faster improvement from the past where it used to take days for a cheque to be cleared.
In a direction issued Wednesday, the RBI said the second phase of the continuous clearing and settlement (CCS) framework has been postponed until further notice. Phase 1 of the system, which was implemented from October 4, will continue to operate as usual. However, the regulator has not said why the postponement or when it the revised timeline will come into force saying “implementation of phase 2 is being postponed, until further notice, to allow more time for banks to streamline their operation,” is all what the notification said.
The new system was timed as follows: phase 1 from October 4, 2025 to January 2, 2026, under which banks must confirm cheques by 7 pm; otherwise, the cheque will be auto-approved. The phase 2 from January 3 would have meant banks will have just 3 hours to confirm each cheque. For example, a cheque received between 10 am and 11 am must be confirmed by 2 pm. Once settlement is complete, the presenting bank will release the funds to customers within 1 hour, subject to usual safeguards.
For a customer, the new system ensures faster access to money, quicker payments for businesses, consistent clearing speed across the country and easier tracking of cheque status across all banks—unlike the present system with of three RBI clearing grids in Delhi, Mumbai, and Chennai. RBI has also revised the working hours for cheque processing. The cheque presentation window will now be open from 9 am to 3 pm, while banks will be able to confirm or reject cheques between 9 am and 7 pm.
The RBI introduced the CCS under cheque truncation system (CTS) to make cheque clearing faster and smoother by moving away from the traditional batch system. Under CTS, cheques are cleared using digital images and electronic data, removing the need to physically move cheques between banks. From October 4, 2025, phase 1 introduced a single, continuous presentation window during the day. Banks scan cheques and send their images and MICR data to the clearing house as they received them, instead of waiting for fixed clearing batches.
Once the drawee bank receives the cheque image, it reviews the details and sends its approval or rejection electronically. If no response is sent by the end of the confirmation window, the cheque is treated as approved and settled. The phase 2 was planned to start from January 3, 2026, and was meant to make cheque clearance even faster. Banks were given three hours to approve or reject a cheque after receiving its image. If a bank failed to respond within this time, the cheque would be automatically approved and settled.
This would have pushed banks to process cheques more quickly and helped customers get their money sooner. The new system, featuring hourly settlements and auto-approvals, promises nationwide uniformity and quicker access to money, greatly enhancing convenience for all customers by allowing the process to be much faster, moving from a batch-based process to continuous clearing and settlement on realisation. This means that funds from cheques could reach your bank account within hours instead of the usual 1-2 business days.