SDG 9: Industry, Innovation, and Infrastructure | SDG 16: Peace, Justice, and Strong Institutions
Institutions: Reserve Bank of India (RBI) | National Payments Corporation of India (NPCI) | Ministry of Finance
The National Payments Corporation of India (NPCI), which operates the Cheque Truncation System (CTS), confirmed that the central system for continuous cheque clearing has stabilized following initial technical challenges encountered after its nationwide implementation on October 4, 2025. The move, mandated by the Reserve Bank of India (RBI), transitions cheque clearing from the traditional batch-based system (T+1 days) to **Continuous Clearing with Settlement on Realisation (T+0 day).
Key Details of the Transition:
System Status: NPCI acknowledged that “teething issues” were encountered at both the central system and participating banks in the initial days, leading to delays and a high volume of returns. The central system, however, has been stable since October 13, 2025, and NPCI is working with banks to resolve remaining issues.
Processed Volume: Since the implementation on October 4, the central system has processed approximately 1.49 crore cheques amounting to over ₹8.49 lakh crore.
The New System’s Goal: Cheques presented between 10:00 AM and 4:00 PM are now processed continuously for near real-time settlement.
Phase 1 (Oct 4, 2025 – Jan 2, 2026): Drawee banks must confirm (honoured/dishonoured) each cheque by 7:00 PM, or it is deemed approved.
Phase 2 (From Jan 3, 2026): The confirmation window shortens significantly to T+3 clear hours (e.g., a cheque received at 11 AM must be confirmed by 2 PM).
Customer Benefit: Once settlement is complete, the presenting bank is required to release funds to the customer within one hour of successful settlement.
This transition represents a major advancement in the operational efficiency of the Indian banking system, providing faster access to funds for both consumers and businesses, and reducing settlement risk for financial institutions. However, the initial delays flagged by bank unions, software issues, and inadequate staff training underscore a recurring challenge in policy implementation: technological readiness must be prioritized over aggressive adherence to timelines. The success of this transition is crucial for ensuring confidence in non-digital payment instruments and maintaining faith in the banking system’s capacity to manage large-scale reforms.
What is the Cheque Truncation System (CTS)?→ CTS is a system that modernizes cheque clearing by stopping the physical movement of the cheque paper. Instead, an electronic image and associated data are transmitted securely for processing and settlement, reducing collection time, operational risk, and costs. The shift to Continuous Clearing (T+0) is the latest upgrade to the existing image-based CTS infrastructure.
Relevant Question for Policy Stakeholders: In light of the initial software and training failures, what mechanism will the RBI implement to certify the operational preparedness of Public Sector Banks before the mandatory Phase 2 implementation on January 3, 2026, to avoid a system-wide choke point?
Follow the full news here: NPCI Press Release Media Statement Update Regarding CTS Continuous Clearing