RBI to Introduce Continuous Clearing and Settlement on Realisation in CTS
The Reserve Bank of India (RBI) has announced a major operational upgrade to the Cheque Truncation System (CTS), transitioning from the current batch-based clearing process to a continuous clearing and settlement on realisation model. This move is aimed at improving efficiency, speeding up cheque clearance, and ensuring faster availability of funds to customers.
The implementation will take place in two phases. Phase 1 will begin on October 4, 2025, and Phase 2 will follow on January 3, 2026. Banks have been directed to prepare their systems for this change and to communicate the updated process to their customers. The directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007.
Key Changes in the Clearing Process
- Single Presentation Session with Continuous Delivery
A unified presentation window will operate from 10:00 AM to 4:00 PM. Cheques received at bank branches must be scanned and transmitted to the clearing house immediately and continuously during this window. The clearing house will then forward cheque images to drawee banks in real time. - Continuous Inward Processing and Confirmation
The confirmation session will run from 10:00 AM to 7:00 PM. Drawee banks must process incoming cheque images as soon as they are received and send either positive confirmations (honoured) or negative confirmations (dishonoured) to the clearing house without delay. Each cheque will carry an Item Expiry Time indicating the deadline for confirmation. - Phased Approach to Confirmation Deadlines
- Phase 1: All cheques must be confirmed by 7:00 PM; unconfirmed items will be deemed approved.
- Phase 2: The deadline will shift to T+3 clear hours. For example, a cheque received between 10:00–11:00 AM must be confirmed by 2:00 PM; otherwise, it will be treated as approved.
- Settlement on Realisation
No accounting entries will be made at presentation. Starting from 11:00 AM, settlements will occur hourly until 7:00 PM, based on positive confirmations and deemed approvals. Negative confirmations will not result in settlement entries. - Customer Payment Release
After each settlement, the clearing house will share the results with the presenting bank, which must release funds to customers promptly, but no later than one hour after settlement, subject to standard safeguards.
This modernised CTS framework is expected to significantly reduce cheque processing time, improve liquidity flow, and align India’s payment infrastructure with global best practices.
