10:20 AM IST – When the Reserve Bank of India introduced faster cheque clearing in 2025, the goal was straightforward. The RBI try to reduce the waiting time for cheque users. Add new rules to modernise an ageing system that still handles large-value transactions across India.
India has around 128 commercial banks as of August 2025. This includes 12 public sector banks, 21 private banks, 28 regional rural banks, 44 foreign banks, 11 small finance banks, 5 payments banks, and 2 local area banks. If we put them together, they serve crores of customers, many of whom still depend on cheques for salaries, government payments, court-related transactions, and business settlements.
What RBI change at the start
In August 2025, the RBI announced Continuous Clearing and Settlement on Realisation under the Cheque Truncation System, popularly known as CTS. The idea was to move away from fixed batch clearing and allow cheques to be cleared continuously during the day.
Phase 1 was implemented on October 4, 2025. In this phase, it allowed cheques to be presented throughout the day with extended confirmation hours. Customers were told that cheque credits could happen much faster. sometimes on the same day.
On paper, Phase 1 looked successful. Large private banks confirmed implementation. Clearing volumes increased. The system stayed live.
But inside bank branches and clearing departments, the reality was far more demanding than the public announcements suggested.
What really happened after Phase 1
For many banks, especially PSU banks and RRB gramin banks, Phase 1 created heavy operational stress for the first weeks.
Cheque clearing is not fully automated. Even today, banks must verify:
- cheque images
- signatures
- account balances
- fraud indicators
- exceptions and mismatches
With continuous clearing, this work no longer happens in limited windows. Staff had to monitor cheques almost the entire day.
Many branches reported:
- delays in inward cheque verification
- Higher cheque return rates due to minor signature mismatches
- late-day confirmations piling up after 6 PM
- pressure on already stretched staff
Customers also felt the impact. In several cases, cheques that were expected to clear faster were returned due to technical or verification issues. Businesses complained about uncertainty. Senior citizens and government vendors faced lots of confusion, when there credits were delayed or reversed due to NPCI clearing issues.
Banks were unevenly prepared
Large private banks with better technology adjusted faster. Smaller banks and PSU banks struggled more.
This uneven readiness was highlighted by The Times of India, which reported in December 2025 that the RBI decided to delay Phase 2 because many banks were not operationally ready for tighter timelines and faster settlement requirements.
The report pointed out that forcing Phase 2 could increase errors and disputes, rather than improving customer experience.
Why Phase 2 became risky
Phase 2 was planned to be implemented at the start of January 3, 2026. Under this phase, banks would have around three hours to approve or reject a cheque after presentation.
For banks already struggling with Phase 1:
- Three-hour confirmation was too aggressive
- Reconciliation risks increased
- Liquidity planning became harder
- customer complaints were expected to rise
A failure by even a few banks could have affected inter-bank settlements.
RBI chose stability over speed
On December 24, 2025, RBI officially postponed Phase 2 until further notice. It also extended CTS confirmation timings to 7:00 PM, giving banks more breathing space.
The decision, issued under the Payment and Settlement Systems Act, 2007, shows RBI’s cautious approach: payment systems must work smoothly for all 128 banks, not just the best-prepared ones.
What does it mean to go ahead
Cheque clearing is fast than before October 2025, but not yet instant for everyone. The issue is the customer base number, Bank want a good momentum first, within 3 month, it is not too easy that momentum, so, it delayed.
RBI has not cancelled Phase 2 yet. It has simply sent a clear message: Fix the system first. Speed will follow.
