The Reserve Bank of India (RBI) will introduce a new system from October 4 to clear cheques within hours of being presented, sharply reducing the current window of up to two working days.The move will transition the existing Cheque Truncation System (CTS) from batch processing to a ‘continuous clearing and settlement on realisation’ model, aimed at improving efficiency, reducing settlement risks, and enhancing customer experience, the central bank said in a circular, PTI reported.Under the revised framework, cheques will be scanned, presented and processed continuously between 10:00 AM and 4:00 PM during business hours. For each cheque, the drawee bank must send a positive confirmation for honoured cheques or a negative confirmation for dishonoured ones.The change will be implemented in two phases. In Phase 1, from October 4, 2025, to January 2, 2026, drawee banks must confirm cheques by 7:00 PM on the same day, failing which they will be deemed approved for settlement. In Phase 2, starting January 3, 2026, an ‘item expiry time’ of T+3 clear hours will be enforced. For instance, cheques received between 10:00 AM and 11:00 AM will need confirmation by 2:00 PM, else they will be considered approved and settled.Once settlement is completed, the clearing house will send confirmation details to the presenting bank, which must release funds to customers immediately and not later than one hour after settlement, subject to safeguards.The RBI has asked banks to ensure readiness for the transition and to inform customers of the new cheque clearing timelines.