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If you handle cheques frequently, get ready for this big upgrade that aligns banking with the future, improving your banking experience drastically. In about seven weeks from now, domestic commercial banks will clear cheques within hours, in line with the RBI's real-time cheque settlement guidelines. This will enable funds to be credited within hours instead of the current cycle that takes 2-3 working days for a cheque deposit to reflect in the bank account.
In a major reform to the cheque clearing system, the Reserve Bank of India (RBI) will introduce real-time settlement from October 4, 2025, enabling funds to be credited within hours instead of the current wait of up to two working days.
The move is set to bring a big smile to the faces of customers waiting for the banking regulator to improve the current practices in this regard. The step will also mark a major milestone in the cheque clearing process currently followed across the country.
Here are some key points to know about this development:
Under the new mechanism, formally known as "Continuous Clearing and Settlement on Realisation", cheques will be scanned and transmitted to clearing houses immediately upon receipt during business hours. Banks will then confirm the presented cheques in real time.
The official hours for this purpose will be from 10 am to 4 pm.
This new system will be implemented in two phases:
Phase 1: From October 4
In this phase, commercial banks will scan and send the cheques, presented between the said business hours, to the clearing house immediately.
The drawee banks will have to confirm payment status by 7:00 pm the same day.
If a bank fails to do this or respond within this timeframe, the cheque will be deemed approved for settlement and then settled on the same day itself.
Phase 2: From January 3
In this phase, the clearance window will be reduced to just three hours from the time of cheque receipt.
Cheques will have to be confirmed within three hours of presentation. Cheques received between 10:00 am and 11:00 am must be cleared or declined by 2:00 pm.
In Phase 2, the funds will be released to the customer within one hour of successful settlement.
The real-time clearing system is expected to:
- Provide customers faster access to funds
- Reduce settlement risks for banks
- Boost business efficiency with quicker transaction cycles
Meanwhile, the RBI has instructed commercial banks to be prepared for this transition and to adequately inform their customers about the changes in cheque clearing timelines, in order to ensure that the cheque clearing process is aligned with modern digital banking expectations, making fund transfers smoother and quicker for bank customers.
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