RBI proposes cutting cheque clearance time to just a few hours; here's how

Reserve Bank of India Governor Shaktikata Das announced on Thursday that the RBI proposed reducing the clearing time for bank cheques from two days to a few hours.

The Cheque Truncation System (CTS), which is presently used, clears cheques in around two days due to its batch processing mode.

The banking regulator is proposing to shift to a continuous clearing with 'on-realisation settlement'.

"CTS currently processes cheques with a clearing cycle of up to two working days. To improve the efficiency of cheque clearing and reduce settlement risk for participants, and to enhance customer experience, it is proposed to transition CTS from the current approach of batch processing to continuous clearing with 'on-realisation-settlement'," a RBI press release said.

"Cheques will be scanned, presented, and passed in a few hours and on a continuous basis during business hours. The clearing cycle will reduce from the present T+1 days to a few hours," it added.

Governor Das said that the new system will speed up cheque payments and benefit both the payee and the payer.

Among the other measures announced on Thursday included hiking the UPI limit for tax payments from ₹1 lakh to ₹5 lakh per transaction and introducing a delegated payment facility in UPI.

The RBI also kept the benchmark repurchase or repo rate unchanged at 6.50% for the ninth straight policy meeting. Four out of the six members of the Monetary Policy Committee voted in favour of the rate decision.