Why RBI’s 3-hour cheque clearance January 3 deadline is extended till further notice

The Reserve Bank of India (RBI) has announced the postponement of the second phase of its faster cheque clearing mechanism to provide banks with additional time to streamline their operations. Initially scheduled to begin on January 3, the second phase of the Continuous Clearing and Settlement on Realisation in Cheque Truncation System (CTS) will now be delayed until further notice.

The move comes after the first phase, which began on October 4, faced some teething issues, PTI reported.

Under Phase 2, banks were required to clear cheques within three hours of their realisation in the CTS system. However, the RBI has decided to push back the implementation to ensure that banks have sufficient time to adjust to the new procedures.

Along with the delay, the RBI also modified the session timings. The presentation session will now run from 9:00 AM to 3:00 PM, and the confirmation session will be from 9:00 AM to 7:00 PM, as opposed to the previously planned 10:00 AM to 4:00 PM and 10:00 AM to 7:00 PM, respectively.

Now, cheques are scanned, presented, and passed in a few hours and continuously during business hours.

The transition has replaced the cheque clearing cycle of up to two working days with a new and faster process, wherein cheques will be cleared within a few hours of presentation.

In Phase 2, the item expiry time of cheques was to be changed to T+3 clear hours.

The RBI's decision to delay Phase 2 reflects its commitment to improving the efficiency of cheque clearing while ensuring smooth transitions for financial institutions across the country.