Banks move to continuous cheque clearing, funds in hours from October 4

From October 4, cheques will be cleared on a near real-time basis under a new continuous clearing system, replacing the batch process and speeding up fund access

Banks will transition to a continuous cheque clearing system from the fixed batch format starting Saturday, a move which will enhance customer convenience, industry experts said.

 

Under the new system, cheques will no longer be processed in fixed batches. Instead, cheques received at bank branches will be scanned and sent to the clearing house continuously during the presentation session, which runs from 10 am to 4 pm.

 

The clearing house will release cheque images to drawee banks on a continuous basis, allowing each cheque to be settled on a near real-time basis, instead of following the current T+1-day clearing cycle.

   

A drawee bank is the bank that holds the account of the person or entity writing the cheque.

 

Vivek Iyer, Partner and Financial Services Risk Leader at Grant Thornton Bharat, said, “This move will ensure that funds

 

are credited within a few hours, giving customers quicker access to funds. It will particularly benefit areas where digital infrastructure is still evolving. Banks’ back-end technologies have also advanced to ensure a smooth transition to the new system.”

 

The implementation will be phased. Phase 1 will run from October 4, 2025, to January 2, 2026, during which drawee banks must confirm cheques presented to them by the end of the confirmation session. Cheques not confirmed within this time will be deemed approved and included for settlement. The item expiry time for all cheques in this phase will be set at 7PM.

 

Phase 2 will begin on January 3, 2026, with the item expiry time for cheques changing to T+3 hours. Cheques not confirmed by drawee banks within three hours will be treated as deemed approved and included for settlement at 2PM.

 

Settlements will be released every hour from 11AM until the end of the confirmation session, based on positive confirmations from drawee banks and cheques considered deemed approved. Presenting banks will process these settlements and release payments to customers within one hour of successful settlement, subject to usual safeguards.

 

Under the cheque truncation system (CTS), the value of transactions in FY25 stood at ₹71.13 trillion, with a volume of 609.54 million transactions. In FY26 so far, the value of transactions has reached ₹29.39 trillion.