Executive Summary:
This document outlines the transition of the Cheque Truncation System (CTS) from batch processing to continuous clearing with settlement on realisation. The transition will occur in two phases, with Phase 1 beginning on October 4, 2025, and Phase 2 on January 3, 2026. All banks participating in the CTS must prepare for these changes and inform their customers accordingly.
Key Points / Main Content:
* **Implementation Phases:**
* Phase 1: October 4, 2025
* Phase 2: January 3, 2026
* **Presentation Session:**
* A single presentation session will be held from 10:00 AM to 4:00 PM.
* Banks must scan and send cheques to the clearing house continuously during this session.
* The clearing house will release cheque images to drawee banks continuously.
* **Inward Processing and Confirmation:**
* The confirmation session runs from 10:00 AM to 7:00 PM.
* Drawee banks must provide positive confirmation for honoured cheques or negative confirmation for dishonoured cheques.
* Each cheque has an Item Expiry Time, indicating the deadline for confirmation.
* Processing by drawee banks should be continuous and in real-time upon receiving cheque images.
* Confirmation information must be sent to the clearing house immediately after processing.
* **Time for Inward Processing:**
* Phase 1 (October 4, 2025 - January 2, 2026): Drawee banks must confirm cheques by 7:00 PM; otherwise, they are deemed approved. The item expiry time is 7:00 PM.
* Phase 2 (Starting January 3, 2026): The item expiry time is changed to T+3 hours. Cheques not confirmed within 3 hours are deemed approved.
* **Settlement on Realisation:**
* No accounting entries are posted for cheque presentations.
* Settlement will occur hourly from 11:00 AM until the end of the confirmation session, based on positive confirmations and deemed approvals.
* No accounting entries are passed for cheques with negative confirmation.
* **Releasing Payment to Customers:**
* The clearing house will release confirmation information to the presenting bank.
* Presenting banks must process this information and release payments to customers immediately, but no later than 1 hour after successful settlement, subject to usual safeguards.
Impact Analysis
* **Participating Banks:**
* Impact: Must adapt their systems and processes to accommodate continuous clearing and settlement, including adjustments to presentation, processing, and confirmation procedures. They also need to inform their customers about the changes.
* Action Required: Prepare systems for continuous clearing, participate in CTS on specified dates, and educate customers about the new cheque clearing process.
* **Customers:**
* Impact: Will experience changes in the cheque clearing process, including potentially faster payment realisation and altered deadlines.
* Action Required: Be aware of the changes in the cheque clearing process and adjust cheque deposits accordingly.
* **National Payments Corporation of India (NPCI):**
* Impact: Responsible for managing the CTS and ensuring its smooth transition to continuous clearing and settlement.
* Action Required: Implement the necessary system changes to support continuous clearing and settlement, and coordinate with participating banks.
Key Entities Referenced
Cheque Truncation System (CTS): A cheque clearing system transitioning to continuous clearing with settlement on realisation.
National Payment Corporation of India: An organization involved with the Cheque Truncation System.
Payment and Settlement Systems Act, 2007: The governing legislation for the directive issued.
October 4, 2025: The implementation date for Phase 1 of the CTS transition.
January 3, 2026: The implementation date for Phase 2 of the CTS transition.
Saurabh Nath: Chief General Manager at Reserve Bank of India.
Reserve Bank of India (RBI): The issuing authority of the policy document.
Mumbai, Maharashtra: Location of the Central Office Building of Department of Payment and Settlement Systems
RBI/2025-26/73
CO.DPSS.RLPD.No.S536/04-07-001/2025-2026 August 13, 2025
The Chairman / Managing Director / Chief Executive Officer of
Banks participating in Cheque Truncation System/
National Payment Corporation of India
Dear Sir / Madam,
Introduction of Continuous Clearing and Settlement on Realisation in Cheque
Truncation System
Please refer to the Statement on Developmental and Regulatory Policies dated August
8, 2024, announcing the transition of Cheque Truncation System (CTS) from the
current approach of batch processing to continuous clearing with settlement on
realisation.
2. It has been decided to transition CTS to continuous clearing and settlement on
realisation in two phases. Phase 1 shall be implemented on October 4, 2025 and
Phase 2 on January 3, 2026. The modalities for the same are given in Annex.
3. All banks are advised to make their customers adequately aware of the changes in
the cheque clearing process.
4. Banks are also advised to be in readiness to participate in continuous clearing in
CTS on the above dates.
5. This directive is issued under Section 10 (2) read with Section 18 of Payment and
Settlement Systems Act, 2007 (Act 51 of 2007).
Yours faithfully,
(Saurabh Nath)
Chief General Manager
भुगतान और ननपटान प्रणाली विभाग, केंद्रीय कायाालय, 14वी मंनिल, केंद्रीय कायाालय भवन,शहीद भगत न ंह मागा, फोटा, मुम्बई - 400001
फोन Tel: (91-22) 2260 1000; फैक्स Fax: (91-22) 2265 9566; ई मेल- e-mail : cgmdpssco@rbi.org.in
Department of Payment and Settlement Systems, Central Office, 14th Floor, Central Office Building, Shahid Bhagat Singh Road, Fort, Mumbai-
400001
नहंदी आ ान है, इ का प्रयोग बढाइएAnnex
Modalities for Continuous Clearing with Settlement On-realisation in CTS
1. Single presentation session with continuous delivery:
a) There shall be a single presentation session from 10:00 AM to 4:00 PM.
b) Cheques received by the branches shall be scanned and sent to the clearing
house by the banks immediately and continuously during the presentation
session.
c) The clearing house will in turn release the cheque images to drawee banks on
a continuous basis.
2. Continuous inward processing and confirmation by banks:
a) The confirmation session shall start at 10:00 AM and close at 7:00 PM.
b) For every cheque presented, the drawee bank shall generate either positive
confirmation (for honoured cheques) or negative confirmation (for dishonoured
cheques).
c) 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.
d) Processing by drawee banks is to be done continuously throughout the day and
on a real time basis as soon as cheque images are received.
e) Information of positive/negative confirmation shall be sent by the drawee banks
to the clearing house immediately after processing.
3. Time available for inward processing:
a) During phase 1 (From October 4 to January 2, 2026), drawee banks shall be
required to confirm (positively / negatively) cheques presented on them latest
by end of 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.
2b) In 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.
4. Settlement on realisation:
a) No accounting entries (settlement) will be posted for presentation of cheques.
b) Starting from 11:00 AM, settlement will be arrived every hour till the end of
confirmation session, based on the positive confirmations received from
drawee banks and cheques considered deemed approved.
c) No accounting entries shall be passed for cheques with negative confirmation.
5. Releasing payment to customers:
a) On completion of settlement, clearing house shall release the information of
positive and negative confirmations to the presenting bank.
b) The presenting bank shall process the same and release the payment to the
customers immediately, but not later than 1 hour from successful settlement,
subject to usual safeguards.
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