Cheque clearance on the same day: How will RBI's continuous clearing system work from October 4?

From October 4, 2025, a major change is set to transform the way cheques are cleared in India. The Reserve Bank of India (RBI) is introducing a continuous cheque clearing system that promises to credit money into your account within hours, instead of taking up to two working days.

This is being hailed as one of the biggest changes in banking operations in recent years. For decades, cheques have been a trusted mode of payment in India. But one of their biggest drawbacks has always been the delay in clearance. Even with digitisation and the introduction of the Cheque Truncation System (CTS), customers often had to wait till the next day—or even longer—for funds to reflect in their accounts.

Now, with the RBI’s new mechanism, cheque clearance is moving closer to real-time settlement, ensuring faster, smoother, and more reliable transactions for millions of customers.

In this detailed article, we will break down everything you need to know:

  • How cheque clearance works today

  • What is changing from October 4

  • The two phases of implementation

  • What benefits you can expect as a customer

  • What role Positive Pay will play

  • How banks are preparing for this shift

Cheque clearance on the same day: How will RBI's continuous clearing system work from October 4?

Why was a change needed?

Before diving into the new system, let’s understand why this change was necessary.

Even today, many individuals, businesses, and even government agencies rely on cheques. Though digital modes of payment such as UPI, NEFT, and IMPS have become popular, cheques still account for billions of rupees in transactions every month.

The problem has always been the time lag. Depending on when a cheque is deposited, it may get cleared only the next day. For businesses that rely on quick cash flow, or individuals waiting for urgent funds, this delay creates unnecessary stress.

For example:

  • If you deposit a cheque late in the evening, it will likely get pushed to the next day’s batch.

  • If the next day is a holiday, clearance could take two to three days.

  • This creates uncertainty and inconvenience, especially for those dependent on cheque payments.

The RBI recognised this gap and, in August 2025, announced a continuous clearing and settlement-on-realisation system to solve this issue.

How does cheque clearing work currently?

At present, cheques are cleared through the Cheque Truncation System (CTS).

Here’s how it works:

  1. When you deposit a cheque, your bank branch scans the cheque and sends its digital image to the clearing house.

  2. The clearing house, managed by the RBI or NPCI, forwards the image to the drawee bank (the bank of the person who issued the cheque).

  3. The drawee bank verifies the cheque details and either approves or rejects it.

  4. Once approved, funds are transferred and credited to your account.

However, the biggest limitation of CTS is that it operates in batches.

  • Cheques deposited before the cut-off time are included in that day’s batch.

  • Those deposited after the cut-off time move to the next batch.

For instance, if a bank has three batches—morning, afternoon, and evening—your cheque will only move forward if it falls within that batch window. This means delays are common.

What is changing from October 4?

Starting October 4, 2025, the RBI will roll out a continuous clearing system.

Here’s what it means:

  • No more waiting for batch processing.

  • Cheques will be processed as and when they are deposited during the presentation hours (10 am to 4 pm).

  • From 11 am onwards, banks will settle payments every hour.

  • The drawee bank must accept or reject the cheque quickly. If it does not respond, the cheque will be treated as “deemed approved” and moved for settlement automatically.

  • Once settlement is complete, the presenting bank will release funds to the customer’s account within one hour.

This will reduce the clearance time from T+1 (next day) to same day, within hours.

Two-phase implementation plan

The RBI has planned this transition carefully in two stages:

Phase 1: From October 4, 2025

  • Banks will have until 7 pm to confirm cheques.

  • If they don’t act, the cheque will be automatically approved.

Phase 2: From January 3, 2026

  • The process becomes stricter.

  • Banks will have to confirm (accept or reject) cheques within three hours of receiving them.

  • This will make the system even faster and closer to real-time settlement.

Benefits of continuous clearing

This system is expected to bring huge benefits for customers and banks alike.

  1. Same-day access to funds
    No more waiting till the next working day. Money will be available within a few hours of depositing the cheque.

  2. Uniform speed across India
    Whether you’re in a metro city or a small town, cheque clearance speed will now be standardised across the country.

  3. Improved efficiency in banking
    Banks will no longer need to manage multiple batch windows. Continuous settlement means smoother operations and fewer backlogs.

  4. Transparency and simplicity
    Customers will know exactly when to expect their funds, without the uncertainty of batch timings.

  5. Boost for businesses
    Small and medium enterprises (SMEs), vendors, and merchants who depend heavily on cheque payments will enjoy faster liquidity and cash flow.

Where will this be applicable?

The new continuous clearing system will be applicable across India, covering all banks under the three RBI clearing grids:

  • Delhi

  • Mumbai

  • Chennai

Together, these grids cover every bank branch in the country.

Many leading banks—including ICICI Bank, HDFC Bank, Kotak Mahindra Bank, and YES Bank—have already announced that they are ready for this transition. Customers of these banks can expect to see faster cheque processing from day one.

The role of Positive Pay

One important element in this new system is Positive Pay.

Positive Pay is a process where the cheque issuer (the person who writes the cheque) re-confirms cheque details electronically before the cheque is cleared.

The customer must verify details such as:

  • Cheque number

  • Date

  • Beneficiary name

  • Account number

  • Amount

This extra layer of authentication helps prevent fraud and ensures that the cheque is genuine.

The RBI has also clarified that only cheques with Positive Pay confirmation will be protected under its dispute resolution mechanism. That means if you want full protection, you must enable and use Positive Pay.

How are banks preparing?

To ensure a smooth rollout, the RBI conducted a trial run on October 3, 2025. This gave banks a chance to test their systems and iron out any technical glitches before the official launch.

Banks have also been sending notifications to customers, urging them to use Positive Pay and explaining the new timelines for cheque clearance.

What does this mean for customers?

For ordinary customers, this change will bring:

  • Faster access to money: No more waiting two days for a cheque to clear.

  • Convenience: Deposit a cheque in the morning, and funds can be available by evening.

  • Certainty: Even if the drawee bank delays action, the “deemed approval” rule ensures cheques are not stuck in limbo.

  • Safety: With Positive Pay, cheque fraud will reduce significantly.

Challenges and considerations

While the new system is highly beneficial, there are a few things to keep in mind:

  • Customers must learn to use Positive Pay regularly to ensure protection.

  • Banks will need to upgrade systems and staff training to handle the hourly settlement model.

  • Some smaller cooperative banks may take time to adapt fully.

  • For high-value cheques, strict vigilance will still be required to prevent fraud.

Conclusion

The RBI’s move to continuous cheque clearing is a game-changer for the Indian banking system. By cutting down settlement time from two days to just a few hours, it brings cheque payments on par with other digital payment methods in terms of speed and convenience.

For businesses, this means faster cash flow. For individuals, it means quick access to funds without the long wait. And for the banking system as a whole, it means greater efficiency and reliability.

From October 4, 2025, India will take a big step forward in modernising its cheque clearing process. And by January 3, 2026, with the three-hour confirmation rule, the system will become even more robust and efficient.

So the next time you deposit a cheque, you won’t have to wait anxiously for days. Your money will likely be in your account the very same day.

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