Clearing time for cheques to be cut from 2 days to a few hours

Mumbai: The RBI aims to reduce the clearing time required for bank cheques to a few hours as part of a major step to facilitate the ease of doing business in the country, RBI Governor Shaktikanta Das said on Thursday.

At present, cheque clearing through the Cheque Truncation System (CTS) operates in a batch processing mode and has a clearing cycle of up to two working days. It is proposed to reduce the clearing cycle by introducing continuous clearing with ‘on-realisation-settlement’ in CTS, Das explained.

“This means that cheques will be cleared within a few hours on the day of presentation. This will speed up cheque payments and benefit both the payer and the payee,” the RBI chief added.

Cheque truncation entails the process of replacing the flow of the physical cheque issued by a drawer from the presenting bank to the paying bank branch. Instead of the physical cheque being sent, an electronic image of the cheque is transmitted to the paying branch through the clearing house, which conveys the relevant information such as the MICR band, date of presentation and the presenting bank. Cheque truncation thus obviates the need to move the physical instruments across bank branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and expedites cheque processing.