Still Using Cheques for Financial Transactions? Here’s an Important Update from RBI You Must Know
From October 4, 2025, the Reserve Bank of India (RBI) will introduce Continuous Cheque Clearing, ending the long wait of up to two days for cheques to clear. Under this system, cheques will be processed within a few hours, giving you faster access to funds.
How the new cheque clearing works
- Cheque Deposit: Cheques deposited at bank branches between 10:00 AM and 4:00 PM will be scanned and sent immediately to the central clearing house.
- Continuous Processing: The clearing house will continuously send cheque images to drawee banks throughout the day.
- Confirmation by Banks: Drawee banks have until 7:00 PM to confirm whether they will honour or dishonour each cheque. If no response is received by the deadline, the cheque is automatically approved and settled.
- Hourly Settlements: Starting from 11:00 AM, and every hour thereafter until 7:00 PM, net funds between banks will be calculated. Banks must release funds to customers immediately, within an hour of settlement.
Benefits of Continuous Cheque Clearing
- Faster Fund Availability: Cheques can be cleared in hours instead of days, improving cash flow.
- Reduced Risks: The system reduces settlement risk for banks and makes the process more efficient.
- Better for Businesses and Individuals: A lunchtime deposit could fund urgent payments or payroll the same afternoon.
Important Habit for Account Holders
With faster clearing, it’s crucial to maintain sufficient funds in your account when issuing a cheque. Cheques will be honoured or returned within hours, without reference back to the issuer.
Phased Rollout
- Phase 1 (Oct 4, 2025 – Jan 2, 2026): Flat 7 PM expiry for all cheques.
- Phase 2 (from Jan 3, 2026): Each cheque will have a three-hour “Item Expiry Time” for faster, more granular processing.
This shift modernises cheque clearing in India, turning it into a near real-time service and making cheque payments faster and more reliable.
