Context:
The Reserve Bank of India (RBI) has announced a major reform in cheque processing by shifting from batch-based Cheque Truncation System (CTS) to continuous cheque clearing, aimed at faster settlements and enhanced customer convenience.
Current Process:
- Cheques are cleared in batches with a T+1 day cycle (up to 2 working days).
- Banks collect, scan, and process cheques in scheduled clearing sessions.
New System – Continuous Clearing:
- Cheques will be scanned, presented, and processed throughout business hours (10 AM – 4 PM).
- Clearing time: reduced to a few hours within the same day.
- Drawee bank will give positive/negative confirmation in real time.
Post-Settlement Rules:
- Clearing house shares results with presenting bank.
- Funds to be released to customers immediately, max within 1 hour after settlement.
Objectives:
- Faster cheque clearance (closer to digital payments).
- Lower settlement risks.
- Enhanced operational efficiency for banks.
- Improved customer convenience.
