Announcing the monetary policy statement on Thursday, Reserve Bank of India governor Shaktikanta Das said that the cheque-clearing cycle will be reduced from the current two business days to a few hours.
To date, cheques were being cleared under the Cheque Truncation System (CTS) in a batch processing mode.
“It is proposed to reduce the clearing cycle by introducing continuous clearing with ‘on-realisation-settlement’ in CTS,” said the governor. This means that cheques will be cleared within a few hours on the day of presentation, which will speed up cheque payments and benefit both the payer and the payee, Das added.
RBI Monetary Policy: New arrangement of cheque clearance
The Cheque Truncation System(CTS) currently processes cheques with a clearing cycle of up to two days from depositing the cheque.
As per the governor’s statement, under the new announcement at the RBI MPC Meet, cheques will now be scanned, presented, and passed in a few hours and continuously during business hours. Thus, the clearing cycle will reduce from the present T+1 days to a few hours.
What is a Cheque Truncation System?
A Cheque Truncation System (CTS) is a process of clearing cheques electronically rather than processing the physical cheque by the presenting bank en route to the paying bank branch. The Reserve Bank of India (RBI) adopted this step in 2021 for quicker cheque clearance.
Instead of physical cheques, an electronic image of the cheques is transmitted to the paying branch through the clearing house, along with necessary information such as the MICR code, the presenting bank, and so on.
RBI Monetary Policy Meet
The MPC voted by a 4 to 2 majority to keep the benchmark repo rate unchanged at 6.5 per cent for a ninth straight policy meeting. RBI retained real GDP growth estimates for FY25 at 7.2 per cent and CPI inflation projections at 4.5 per cent.
