RBI Circulars: Introduce Continuous Clearing Cheque Truncation System(CTS) From 4 October

Overview of Changes

The RBI is modernising the cheque clearing process by moving from the current batch-based system to a continuous clearing system where cheques are processed in real-time throughout the day rather than in predetermined batches.

Implementation Timeline

• Phase 1: October 4, 2025 to January 2, 2026
• Phase 2: Starting January 3, 2026

Key Changes in the New System

Presentation Process

• Single presentation session from 10:00 AM to 4:00 PM
• Banks must scan and send cheques to the clearing house immediately and continuously during this window
• The clearing house releases cheque images to drawee banks on a continuous basis

Processing Requirements

• Confirmation session runs from 10:00 AM to 7:00 PM
• Banks must provide either positive confirmation (for honored cheques) or negative confirmation (for dishonored cheques)
• Processing must be done continuously and in real-time as images are received

Time Limits for Processing

• Phase 1: Banks must confirm all cheques by 7:00 PM (end of confirmation session)
• Phase 2: Banks get only 3 hours to process each cheque (T+3 hours rule)
  • Example: Cheques received between 10:00-11:00 AM must be confirmed by 2:00 PM

Settlement Changes

• No upfront settlement when cheques are presented
• Settlement occurs every hour starting from 11:00 AM based on positive confirmations
• Settlement happens only after confirmation, not upon presentation

Customer Payment Release

• Banks must release payments to customers immediately after settlement
• Maximum delay allowed: 1 hour after successful settlement

Special Clearing on October 3, 2025

To ensure smooth transition, a special clearing session was arranged for October 3, 2025:

Technical Requirements

• Banks must use clearing type “99”
• Session numbers: “21” for presentation and “22” for return
• Regular clearing sessions are suspended on this day

Impact for Banks and Customers

For Banks

• Must upgrade systems for real-time processing
• Need adequate staffing throughout extended hours (10:00 AM – 7:00 PM)
• Must maintain sufficient settlement account balances
• Shorter processing windows require more efficient operations

For Customers

• Faster cheque clearance – payments released the same day in many cases
• More predictable timing for fund availability
• Banks must educate customers about the new process

Regulatory Authority

The directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007.

Key Benefits of the New System

1. Faster Processing: Real-time clearing instead of batch processing
2. Improved Efficiency: Continuous settlement throughout the day
3. Better Customer Service: Quicker access to funds
4. Risk Reduction: Shorter settlement cycles reduce systemic risk
5. Modernization: Aligns India’s cheque clearing with international best practices

This transformation represents a significant modernisation of India’s payment infrastructure, making cheque processing more efficient and customer-friendly while maintaining the security and reliability of the banking system.

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