RBI to Roll Out Continuous Clearing and Settlement in CTS Banking System in Two Phases.
Banking & Finance
The Reserve Bank of India (RBI) has announced a transformative upgrade to the Cheque Truncation System (CTS), transitioning from batch processing to continuous clearing with on-realisation settlement. This two-phase rollout begins on October 4, 2025, aiming to drastically accelerate cheque processing across the banking sector.
- The RBI will implement the continuous clearing mechanism in two distinct phases. Phase 1 starts on October 4, 2025, mandating that cheques presented are continuously scanned, transmitted, and lodged with the clearing house throughout business hours. Phase 2 begins on January 3, 2026, refining settlement timelines further to reduce cheque expiry to just a few hours.
- Instead of the conventional delayed batch processing, cheques will now be processed in real time. The new system ensures that once a cheque is presented, it is immediately scanned and forwarded. Drawee banks must confirm (honour or dishonour) by 7 PM the same day, or risk being deemed approved.
Main Point :- (i) Under the existing framework, cheque clearing can take up to two working days. The revamped CTS will shrink this cycle to mere hours by implementing continual processing of cheque images and data.
(ii) The move is expected to significantly improve customer experience by substantially reducing wait times for fund realization. It will also bolster banking efficiency, curb settlement risks, lower operational costs, and enhance liquidity—bringing cheque processing speeds closer to those of NEFT (National Electronic Funds Transfer) and RTGS (Real-Time Gross Settlement).
(iii) The phased approach gives banks essential lead time to revamp infrastructure, fine-tune operations, and train personnel. Expect detailed implementation guidelines from the RBI soon to ensure seamless adoption of the new CTS protocols.
About RBI
Governor : Sanjay Malhotra
Headquarter : Mumbai
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