Now Bank Cheques will be cleared in a few hours instead of two days, RBI launches new technology
The Reserve Bank of India (RBI) aims to reduce the clearing time for bank cheques to a few hours, enhancing the ease of doing business in the country. This announcement was made by RBI Governor Shaktikanta Das on Thursday.
Current Cheque Clearing Process
Presently, cheque clearing through the Cheque Truncation System (CTS) takes up to two working days due to its batch processing mode.
Introduction of Continuous Clearing
Das revealed that the RBI plans to introduce continuous clearing with an ‘on-realisation-settlement’ mechanism in CTS to speed up the process. “This initiative will ensure cheques are cleared within a few hours on the day they are presented, speeding up payments and benefiting both the payer and the payee,” Das stated.
Cheque Truncation Explained
Cheque truncation involves replacing the physical cheque with an electronic image, which is transmitted to the paying branch through the clearing house. This electronic image includes essential information such as the MICR band, date of presentation, and the presenting bank details, eliminating the need for the physical cheque to be transported between banks.
Benefits of Cheque Truncation
By removing the need for physical movement of cheques, the truncation process reduces associated costs, shortens collection times, and accelerates cheque processing. CTS offers quicker and more cost-effective fund realisation for customers compared to traditional methods that rely on physical cheque movement.
Grid-based CTS Clearing System
Under the grid-based CTS clearing system, all cheques drawn on bank branches within the grid’s jurisdiction are treated as local cheques. This eliminates outstation cheque collection charges if both the collecting and paying banks are within the same grid, regardless of their city locations.
