RBI Introduces Real-Time Cheque Clearing: Settlement Within Hours from October 4, 2025
- REEDLAW
- Aug 16
- 2 min read
REEDLAW Legal News Network reports: In a landmark move to modernise India’s banking framework, the Reserve Bank of India announced the introduction of real-time cheque clearing, effective from October 4, 2025. Under this reform, cheque settlements, which earlier required up to two working days, would now be processed within hours, significantly enhancing liquidity, predictability, and operational efficiency for both individuals and businesses.
The reform was structured in two distinct phases to ensure smooth implementation. From October 4, 2025, to January 2, 2026, banks were mandated to continuously scan cheques between 10:00 AM and 4:00 PM, with drawee banks required to provide confirmation by 7:00 PM on the same day. Any delay in confirmation would result in deemed approval and same-day settlement. Beginning January 3, 2026, stricter timelines were introduced, requiring drawee banks to confirm cheque status within three hours of receipt, with funds credited within one hour thereafter. This framework represented a shift towards near real-time processing, aligning cheque transactions with the efficiency of digital payment systems.
The second phase, commencing January 3, 2026, introduces a more stringent framework, requiring drawee banks to confirm cheque status within three hours of receipt. Funds are mandated to be credited within one hour after settlement. For instance, a cheque received between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM, and if confirmation is not provided, it will be automatically included for settlement at 2:00 PM.
According to the RBI circular, the shift towards continuous clearing and settlement on realisation is aimed at enhancing operational efficiency and reducing systemic risks. Cheques will be scanned and transmitted to the clearing house by presenting banks immediately during the presentation session, and every cheque will trigger either a positive or negative confirmation by the drawee bank.
The reform is expected to deliver multiple benefits. Customers will experience faster liquidity as cheque deposits reflect in their accounts within the same day. Predictability of cash flows will improve, with dishonours communicated promptly, reducing uncertainty in financial planning. The accountability of drawee banks will also be reinforced, as inaction within prescribed timelines will automatically translate into approval. Additionally, faster settlement cycles will lower the risk exposure for both customers and banks, aligning cheque clearance with modern digital payment standards.
From October 2025 onwards, customers depositing cheques before 4:00 PM can expect same-day confirmation or settlement. From January 2026, the turnaround time will shrink further to just three hours, with credit to accounts occurring within the next hour, marking one of the most significant modernisations in India’s banking system in recent years.
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