1. New Announcement
The Reserve Bank of India (RBI) has announced that cheque clearance will now be completed within a few hours, compared to the current timeframe of two to three days. This was disclosed during the Monetary Policy Committee meeting on August 8, 2024.
2. Objective
The initiative aims to enhance the efficiency of cheque clearing, reduce settlement risks, and improve the overall customer experience.
3. Current System
- The Cheque Truncation System (CTS) presently operates in batch mode, with a clearing cycle taking up to two working days.
- Cheques are physically truncated, and electronic images are sent for clearing.
4. New System
- The CTS will transition to continuous clearing with "on-realisation-settlement."
- Cheques will be scanned, presented, and cleared within a few hours on the same day of presentation.
5. Detailed Guidelines
RBI will issue specific guidelines shortly to ensure smooth implementation of the new cheque clearance norms.
6. Comparison with Other Payment Methods
- NEFT: Available 365 days, with transactions processed in 48 half-hourly slots; no maximum transfer limit.
- RTGS: Allows immediate transfer of large sums; operates 24/7.
- - IMPS: Enables instant transfer of amounts up to Rs. 2 lakhs, available 24/7.
7. Impact
The new cheque-clearing process will closely match the speed of NEFT and RTGS, significantly reducing the time and improving efficiency for both payers and payees.
8. Expert Opinion
Dinesh Khara, Chairman of the State Bank of India (SBI), noted that the new norms will ensure "on-realisation-settlement," making cheque clearing faster and more reliable.
9. Benefits of CTS
- Faster and more cost-effective fund realization.
- Elimination of outstation cheque collection charges within the same CTS grid.
- Corporates can obtain cheque images for internal purposes if needed.
10. Cheque Truncation
- Physical cheques are stopped at the presenting bank, and electronic images are sent for processing.
- This method reduces physical movement costs and time, streamlining the cheque-clearing process.
Important FAQs on CTS
- Truncation Process: Cheque truncation stops the physical movement of cheques, transmitting only electronic images and relevant data for clearing.
- Customer Benefits: Faster fund realization, lower costs, and no outstation charges within the CTS grid jurisdiction.
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