On August 13 2025, the Reserve Bank of India (RBI) issued a circular for introduction of ‘Continuous Clearing and Settlement on Realisation in CTS’. As per RBI’s circular, the Cheque Truncation System(CTS) which currently processess cheques with a clearing cycle of upto two working days, is set to transition to continuous clearing with ‘on-realisation-settlement’.
- The new mechanism will be implemented in two phases i.e. Phase-I will come into effect on October 04, 2025 while Phase-2 is scheduled to commence on January 03, 2026.
- It aimed to enhance the efficiency of cheque clearing and reduce settlement risk for participants in the cheque clearing system, as well as to improve customer experience.
Exam Hints:
- What? Introduction of new mechanism for processing of cheques
- Name of New Mechanism: ‘Continuous Clearing and Settlement on Realisation in CTS’
- Phase-wise implementation: Phase-I (on October 04, 2025) and Phase-II (on January 03, 2026)
- Change in Processing Time: from current ‘T+1’ days to just few hours
- Presentation Time: 10 AM to 4 PM
About Continuous Clearing and Settlement on Realisation in CTS:
Single Presentation Time: As per the new mechanism, there will be a single (cheque) presentation session from 10 AM to 4 PM.
Processing of Cheques: Cheques received by the bank branches will be scanned, presented, and passed to the clearing house immediately and continuously during the presentation time, thereby reducing the clearing cycle from current ‘T+1 days’ to just a few hours.
- The confirmation session shall start at 10 AM and close at 7 PM. For every cheque presented, the drawee bank shall generate either positive confirmation (for honoured cheques) or negative confirmation (for dishonoured cheques)
Timeline for Phase-I:Â During Phase-I, it is mandatory for drawee banks to confirm (positively/negatively) cheques presented on them by 7:00 pm on the same day, in failure to do the confirmation by then, the cheques will be considered as approved for settlement.
Timeline for Phase-II:Â During Phase-2, cheques are required to be confirmed within the 3 hours of presentation time (T+3 hours clear hours), if no confirmation is received within the specified time limit, then, the cheque will be considered approved.
Completion of Settlement: RBI has clarified that after the completion of settlement; the presenting bank is required to release the funds to the customer immediately within an hour.
About Reserve Bank of India (RBI):
Governor- Sanjay Malhotra
Headquarters- Mumbai, Maharashtra
Established- April 01, 1935
