Banks to Clear Cheques Within Hours From October 4: RBI
New Delhi, October 4, 2025 – In a historical reform of the country’s banking infrastructure, the Reserve Bank of India (RBI) has said that banks will start clearing the checks within hours of presentation, which brings dramatic acceleration in the check settlement timeline. From Saturday, October 4, it will not take one to two working days to settle the check; Instead, they will be processed under a continuous clearing and disposal model in a single day.
This overhaul replaces the existing batch-based check transaction system (CTS) approach with a more real-time mechanism, enabling rapid fund transfers to banks. The new system is being rolled out in two stages, with rapidly strict confirmation windows for dry banks.
What is the change from October 4?
Under the revised structure, checks presented between 10:00 am and 4:00 pm will be scanned and sent continuously (instead of waiting for the daily batches). From 11:00 am, interbank settlements will be based on one per hour, which will be on confirmation from the dry banks.
In step 1, covering from October 4, 2025, to January 2, 2026, Drawee banks should confirm the check by 7:00 pm on the same day (ie, a positive or negative response). If no response is received, the check will be considered approved (“understood”) and will be included in the settlement process
In step 2 (from January 3, 2026), this window shrinks to a large extent – Dra banks will have just three hours to confirm the check after being submitted. If there is no confirmation in that window, the check will be auto-ordered and approved.
Once settlement instructions are processed by the clearing house, the presenting banks are required to credit the customer’s accounts within one hour of receiving the settlement.
Why RBI Is Making the Change
RBI’s decision to infection for clearing continuous investigation from several drivers:
- Rapid funds access: Under the old system, checks in batches can take one or two working days, especially when parties are in separate cities or cleans the grid. The real-time model ensures that customers have faster access to funds.
- Better cash flow for businesses: Especially dependent on checks for small and medium enterprises, rapid withdrawal work improves capital management.
- Modernization and uniformity: This step brings close payments in speed and efficiency for digital payments and ensures a similar user experience in all banks
- Lowering delays and failures: A Continuous system reduces the delay of processing and distant check-in transit.
Impact on banks and customers
Banks will have to upgrade their back-end technology, clearing operations and coordination with a clearinghouse to support check images, confirmation and continuous flow of hourly disposal per hour. Some banks had already announced readiness: HDFC Bank and ICICI Bank have confirmed that they will adopt the same-day withdrawal starting from October 4.
Banks are also encouraging customers to use a positive pay system for large checks (such as ₹ 50,000 amount above), in which the issuers present the major check information before the issuer time (account number, check number, date, date, amount of payment name) so that the bank can cross the bank when the banks are introduced. It helps reduce fraud and mismatched rejection.
For customers, change means:
- Faster crediting of funds: Money may reflect in the recipient’s account during the same day, often within a few hours.
- Greater requirement for accurate cheque information: To avoid rejections, details on cheques must be precise (date, amount in words/figures, signature, no overwriting)
- Use of Positive Pay for high-value cheques: Ensuring pre-submission of details may become necessary.
- Mindful balancing: As cheques clear faster, account holders need to maintain adequate balance to avoid bounce or overdraft, since funds may leave more swiftly than earlier.
Challenges and Risks Ahead
While the reforms promise clear benefits, some challenges loom:
- Technical readiness: Banks, especially smaller ones or rural branches, will need to upgrade infrastructure and ensure high reliability and uptime to support real-time traffic.
- Operational stress: The constant flow of cheque images and confirmations will require robust capacity planning, monitoring, and contingency handling for exceptions (e.g., damaged images, network failure).
- Fraud control: Faster clearance reduces window for manual verification; thus, adoption of tools like Positive Pay and robust risk monitoring becomes more critical.
- Customer adaptation: Users must adjust to the quicker pace, ensuring accuracy in cheques and timely accounting oversight. Some may initially face confusion or errors in the transition.
A Turning Point in India’s Payment Landscape
With cheque volumes in India still significant — under the earlier CTS regime, in FY25, cheque transactions ran into ₹71.13 trillion across more than 609 million items— the shift to continuous clearing represents a major inflection point. It signals the RBI’s intent to harmonise the cheque mechanism with the rapid tempo of digital payments and usher in a new era of efficiency in the payment infrastructure.
If implemented smoothly, this change could reduce frictions in trade, bolster liquidity for businesses, and improve customer satisfaction. When Phase 2 begins in January 2026, cheque clearing will approach a truly real-time standard, bringing the system in line with modern expectations of immediacy.
As India transitions, the success of this initiative will depend on cooperation across the banking ecosystem, disciplined operational execution, and customer awareness. For users who still depend on cheques, the wait is nearly over — funds will now come faster than ever.