MUMBAI: The new cheque clearing system of the RBI with nationwide uniformity and much shorter time lag allowing credit/debit into/from an account within a few hours, is kicking in from today, October 4.
According to the regulator 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 1-2 business days.
The new system not only makes clearing speed uniform nationwide, it also makes tracking the status of cheques much simpler and more transparent apart from reducing settlement risks for banks and improves overall efficiency.
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.
The RBI had conducted trial run on October 3 to ensure banks are ready for the official rollout.
What is changing in cheque clearing?
Under the new system, cheques will no longer be processed in fixed batches. Banks will scan and send cheques continuously during the presentation session, which runs from 10 am to 4 pm. Each cheque will now be settled on a near real-time basis, cutting the clearing cycle from the current T+1 days to just a few hours.
The regulator has also issued guidelines requiring banks to confirm cheques either positively (honoured) or negatively (dishonoured) during the session. If the drawee bank does not respond within a few horus, the cheque will be deemed approved and included in settlement.
Cheques deposited between 10 am and 4 pm will be scanned and sent to the clearing house immediately. From 11 am onwards, banks will settle payments hourly.
In phase 1 (Oct 4, 2025–Jan 2, 2026), banks must confirm cheques by 7 pm; otherwise, the cheque will be auto-approved.
In Phase 2 (from Jan 3, 2026), 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.
What does this mean for customers?
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.
History of cheque clearing progress
Cheque clearing has been getting gradually modernized over decades: Pre-1980s: each cheque had to be manually processed and used to take a week at least.
From the 1980s: MICR sorting reduced local clearing to 1–3 days. MICR stands for magnetic ink character recognition, which is a technology used in the banking industry to process cheques and other financial documents quickly and accurately. It uses special magnetic ink and fonts to print machine-readable characters on cheques, which enables automated processing and helps prevent fraud. The magnetic ink allows machines to read the information even if the document is slightly damaged. Components of a MICR code include a 9-digit code that includes information about the bank and its branch. Of which first 3 digits represent the city or area code, the next 3 digits represent the bank and the last 3 digits represent the specific branch.
From 2008, the cheque truncation system (CTS) was introduced bringing down the clearance to just 1 day. From 2021, the RBI rolled out the nationwide grid bringing a uniform T+1 clearing.