Indian Bank Account Holders, Prepare for Swift Cheque Processing
The Reserve Bank of India (RBI) is set to transform the cheque clearing process for Indian bank customers, transitioning from the current Cheque Truncation System (CTS) to a near real-time clearing and settlement system. This reform, scheduled to roll out in two phases, aims to significantly speed up the cheque clearing cycle and enhance customer convenience.
From October 4, 2025 (Phase 1), cheques presented between 10 am and 4 pm will be scanned and sent to the clearing house immediately. Drawee banks must confirm the cheque's status (honour or dishonour) by 7 pm the same day. As a result, customers can expect cheque clearance within a few hours instead of waiting two working days.
The second phase of changes will commence on January 3, 2026. Banks will have only three hours from receiving a cheque to confirm whether it is cleared or declined. After this initial rollout, the RBI will implement further enhancements to move towards even faster, near real-time clearing and settlement.
This move from batch processing to continuous clearing and settlement will result in near real-time cheque processing for Indian bank customers, with almost instant clearance expected from January 2026. The changes will particularly benefit Indian expats in the UAE who use cheques for transactions back home, as funds will be credited as soon as one hour after settlement from October 2025.
It is important to note that these changes do not affect the use of electronic payment methods such as online banking or mobile wallets. Moreover, the fraud risk remains low because CTS uses secure digital imaging instead of moving physical cheques.
Indian banks have been asked to notify customers about the upcoming changes in the Cheque Truncation System, and it is expected that they will ensure their systems are ready for the changes. However, the changes do not provide information on any possible fees or charges associated with the faster cheque processing.
These reforms are aimed at improving banking efficiency and customer convenience, signifying a significant step forward in India's digital banking landscape. The changes do not apply to any other regions or countries outside of India.
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