RBI to Introduce Continuous Cheque Clearing with Hourly Settlements from January 2026 [Read Notification]

The Reserve Bank of India (RBI), through its Notification No. RBI/2025-26/73; CO.DPSS.RLPD.No.S536/04-07-001/2025-2026 dated August 13, 2025, has announced a major reform to the Cheque Truncation System (CTS).

The central bank will move away from the current batch-based cheque processing to a continuous clearing system with settlement on realisation. This change will be implemented in two phases, beginning on October 4, 2025, and will be fully operational from January 3, 2026.

At present, cheque processing in India follows a batch settlement model. Cheques presented during the day are processed together, and settlements usually take place once per day. Under the new framework, cheques will be processed and settled hourly, which will allow customers to receive funds much faster, often on the same day and within hours of deposit.

In Phase 1 (October 4, 2025, to January 2, 2026), the RBI will fix the expiry time for all cheque items at 7:00 PM. Drawee banks, the banks on which the cheques are drawn, will need to confirm payment decisions by the end of the confirmation session. If no confirmation is sent by the deadline, the system will treat the cheque as “approved” for settlement.

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In Phase 2 (from January 3, 2026), the expiry time will be tightened to T+3 clear hours. This means that if a cheque is scanned and submitted at 10:15 AM, the drawee bank will have to send its confirmation by 2:00 PM on the same day. This change aims to ensure faster turnaround times and prevent delays in settlement.

The operational flow under the new system will change:

• Presenting banks will scan and send cheques continuously from 10:00 AM to 4:00 PM.
• The clearing house will release cheque images to drawee banks in real time.
• Drawee banks will process incoming cheques immediately and send positive (approve) or negative (dishonour) confirmations back to the clearing house.
• From 11:00 AM to 7:00 PM, settlements will take place every hour for all confirmed or deemed-approved cheques. Dishonoured cheques will be excluded from settlement.
• Presenting banks will be required to credit funds to customers immediately after settlement, and no later than one hour after successful settlement, subject to necessary safeguards.

The RBI explained that this move will speed up cheque clearance, reduce uncertainty for both banks and customers, and improve overall efficiency in the payment system. The reform is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007.

For customers, the benefit is clear, cheques deposited in the morning could be credited into their account by the afternoon. For banks, it will require system upgrades, changes in back-end processing, and staff training to handle real-time inward cheque confirmations and hourly settlements.

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