The Reserve Bank of India (RBI) has announced the implementation of a new system from October 4th to expedite the check clearance process. The existing batch system will be replaced with continuous clearing and settlement, enabling payments to be received within a few hours. This change will be implemented in two phases and customers will receive funds faster.
New Delhi: The Reserve Bank of India (RBI) on Wednesday announced major changes to the Check Truncation System (CTS), which will now complete check clearance in a matter of hours instead of days. The first phase will be implemented from October 4th, requiring banks to confirm checks by 7 PM on the same day, while this time will be reduced to three hours from January 3rd. The new system will facilitate continuous processing of checks from 10 AM to 4 PM and hourly settlement, which is expected to allow customers to receive payments within an hour. This step has been taken with the aim of accelerating transactions and improving customer experience.
First Phase to Begin on October 4th
The RBI stated that from October 4th, check processing will shift from the existing batch system to a continuous clearing and settlement system. In the first phase, banks will have to confirm the check by 7 PM on the same day it is received. If the bank does not confirm within this time frame, the check will automatically be considered approved for settlement.
Stricter Time Limit from January
In the second phase, which will be implemented from January 3rd, banks will have only three hours to confirm the check. This means that within a few hours of depositing the check, it will be determined whether the funds will be credited to your account or not.
Continuous Processing
Under the new system, banks will continuously scan checks and send them to the clearing house from 10 AM to 4 PM. As soon as a check arrives, a scanned copy will be immediately sent to the drawee bank. Settlement will then take place every hour from 11 AM until processing ends.
The RBI says that after settlement, the funds will reach the customer's account within an hour, provided all necessary checks have been completed. This change will significantly speed up the process, which previously took two to three days for a check to clear.
Instructions to Banks for Preparation
The RBI has asked all banks to make the necessary technical and procedural preparations for the new system. Instructions have also been given to inform customers about the new changes so that they are aware and can take advantage of them in a timely manner.
Along with check processing, the RBI has also taken another major decision. Permission has now been granted to invest surplus foreign currency in government bonds. This will increase liquidity in the financial market and promote investment.
Benefits for Customers and Banks
The new system will benefit customers with faster payments and make the transaction process easier for banks. This rule will apply to both small and large check transactions. This will bring both transparency and speed to transactions.
