RBI introduces major overhaul of the Cheque Truncation System (CTS) by shifting from batch processing to continuous clearing with settlement on realisation.
Current System: Cheques are cleared in batch sessions. Settlements are processed based on batches, not in real time.
New System: CTS will shift to continuous cheque clearing and real-time settlement (on realisation).
The move aims to reduce processing time, enhance customer experience, and improve efficiency in the cheque clearing ecosystem.
Implementation Phases
Phase 1 (From October 4 to January 2, 2026): Drawee banks shall be required to confirm (positively / negatively) cheques presented on them, latest by the end of the confirmation session (i.e. 7:00 PM), else those will be deemed to have been approved and included for settlement. Item expiry time for all cheques shall be set as 7:00 PM in phase 1.
Phase 2 (from January 3, 2026): The item expiry time of cheques shall be changed to T+3 clear hours. For example, the cheques received by drawee banks between 10:00 AM and 11:00 AM will have to be confirmed positively or negatively by them by 2:00 PM (3 hours from 11:00 AM). Cheques for which confirmation is not provided by the drawee bank in the prescribed 3 hours shall be treated as deemed approved and included for settlement at 2:00 PM.
How the New CTS Will Work
1. Presentation Session (10:00 AM – 4:00 PM)
Cheques are scanned and sent immediately and continuously to the clearing house.
Clearing house forwards them to drawee banks on a real-time basis.
2. Confirmation Session (10:00 AM – 7:00 PM)
- Drawee banks process incoming cheque images and return either a Positive confirmation (honoured) or a Negative confirmation (dishonoured)
- Each cheque will contain the ‘Item Expiry Time’, which indicates the latest time by which confirmation for the presented instrument needs to be provided by the drawee bank.
- Must process cheques as they come – continuously throughout the day.
3. Item Expiry Time
Phase 1: Expiry time for all cheques = 7:00 PM (if not responded to by then, they’re deemed approved).
Phase 2: Expiry = 3 hours after receipt of cheque. (e.g. Cheques received at 10:00 AM–11:00 AM → confirm by 2:00 PM and so on)
4. Settlement on Realisation (Hourly from 11:00 AM)
Only cheques with positive confirmation or deemed approval are included in hourly settlements.
5. Customer Credit Timeline
Presenting banks must credit customer accounts within 1 hour of settlement, subject to usual safeguards.