New cheque clearing process starting from Oct 4, 2025

New cheque clearing process in India starting from October 4, 2025

Existing System (Until Oct 3, 2025) : Clearing Method: Batch clearing

Switch to Continuous Clearing (on‐realisation)  : The current batch-wise settlement model for cheques will be replaced with a continuous clearing system. Rather than waiting for a fixed “cheque-clearance slot,” cheques presented during the day will be processed and confirmed in a rolling fashion. Settlement Time: 1 day after cheque presentation, Money Credited: Within 2 days

What is Positive Pay : A fraud-prevention system where cheque issuers (drawers) must pre-share cheque details (number, date, amount, payee) with the bank before it is presented. Drawer emails cheque details (in bank’s excel format) to the regional Positive Pay email ID. Bank verifies details, Confirmation of acceptance/rejection sent to drawer., In case of rejection (data mismatch/unregistered email), customer must resubmit details.

Under the Positive Pay. Cheques must be presented between defined hours (especially in Phase 1: 10 am to 4 pm) to avail of continuous clearing. Banks will need to upgrade infrastructure (scanning, image transmission, processing) to support continuous clearing. Dispute / rejection handling will become more time-sensitive. In some cases, fraud checks or exceptions may still cause delays beyond the ideal continuous window. Customers and institutions will need clarity on which cheques / branches will be covered initially, as not all branches or types may be enabled immediately. key Benefits of the above change are like Faster access to funds, Extended cheque presentation hours, Real-time settlement improves liquidity

Positive Pay Requirement & Applicability at Bank: Recommended for cheques above INR 50,000. Mandatory for cheques above INR 5,00,000. Only cheques with Positive Pay confirmation are protected under RBI’s dispute resolution mechanism. RBI’s Official Framework:

Cheque Clearing Changes Timeline

Phase 1 (Oct 4, 2025): Faster Confirmations/Settlement Windows: Clearing Method:Continuous clearing with real-time settlement Continuous clearing during the 10 am – 4 pm window, settlement on the same day.

• During Phase 1 (starting 4 October 2025): Cheques presented between 10:00 am and 4:00 pm must be scanned and sent for processing immediately.
• The drawee bank needs to confirm status (i.e. accept or reject) by 7:00 pm on the same day. Money Credited: Within 1 hour of settlement
• If the drawee bank doesn’t respond by the deadline, the system may auto-treat it as approved and proceed with settlement.

Phase 2 (Jan 3, 2026): Later Phase (from 3 January 2026) : Clearing Method: Continuous clearing with real-time settlement 

Hourly turnaround and near real-time settlements. The clearing turnaround will be narrowed further—for example, cheques deposited between 10:00–11:00 am must be cleared or rejected by 2:00 pm. Once settled, the presenting banks are expected to credit the beneficiary’s account within one hour, subject to standard checks. Money Credited: Within 1 hour of settlement Cheques deposited in each 1-hour slot will have to be cleared within a few hours. Example: Cheques deposited between 10:00–11:00 am must be cleared or returned by 2:00 pm. Once cleared, the beneficiary’s bank will have to credit funds within an hour.

Main Goal/ Objective of this change :

Move cheque payments closer to NEFT/RTGS-like speed while retaining cheque usage safety. Always keep your account funded before issuing cheques (same-day debit will happen). Ensure correct cheque details (date, amount, signature, beneficiary). For  cheques above INR 50,000 : register under Positive Pay to avoid rejections/delays. For cheques above INR 5,00,000 : Positive Pay is mandatory. Expect your payee to receive funds within hours instead of days.

Implications & What You Should Know: New cheque clearing process in India starting from October 4, 2025

Aspect	Under Old System	New System (from 4 Oct 2025 / later)
Time taken for clearance	Often up to 1–2 working days	Within same day (hours) for many cheques
Confirmation window	Batch processing (fixed windows)	Rolling / continuous during business hours
Auto fallback	Not common	If no response by deadline, auto-approval may kick in
Final settlement & credit to payee	After batch settlement cycles	Faster credit (within an hour in later phase)
Scope of deposit times	Only at cut-offs / batch windows	Cheques during 10 am – 4 pm band will be eligible for continuous processing

FOUR PSU BANKS SET TO MERGE!

• Consolidate smaller public sector banks into larger ones for better efficiency and stability. Government Plan: Under PM Modi’s vision, the next big phase of bank mergers is being prepared.
• Impact Current PSU Banks: 12  & Post-Merger Projection: Could reduce to 8 by FY 2027. This move aims to Strengthen capital base, Improve operational efficiency, Reduce duplication and costs.

Proposed Mergers