The Reserve Bank of India (RBI) has postponed the implementation of Phase 2 regulations related to faster cheque clearance. These rules were earlier scheduled to come into effect from January 3, 2026.
However, through a circular issued on December 24, the central bank announced that the second phase of the Continuous Clearing and Settlement (CCS) framework has been deferred until further notice.
The RBI clarified that the new implementation date for Phase 2 will be announced later. Until then, the existing cheque clearance system will continue to operate under Phase 1 rules.
Phase 1 Cheque Clearance System Will Continue
The Phase 1 framework, which was introduced earlier this year, will continue to function without any changes. Under this system, cheque clearance already happens faster than before, compared to the old batch-based method.
The RBI has also revised the working hours for cheque processing under Phase 1:
Cheque presentation window: 9:00 AM to 3:00 PM
Cheque approval or rejection time: 9:00 AM to 7:00 PM
Banks can verify cheque details and take action during these extended working hours, ensuring smoother processing.
Cheque Clearing Now Happens Digitally
Cheque clearing in India is now carried out using digital images and electronic data instead of physical movement of cheques.
The RBI introduced the Continuous Clearing and Settlement (CCS) system under the Cheque Truncation System (CTS) to reduce the time taken to clear cheques.
Under this system:
Physical transfer of cheques between banks is no longer required
Banks scan cheques and send their images along with MICR data to the clearing house
This digital process saves time and improves efficiency
The CCS framework is very different from the earlier batch system, where cheques were cleared only at fixed intervals.
How the New Cheque Clearing System Works Faster
Under Phase 1, a single and continuous daytime cheque presentation window was introduced from October 4, 2025. Once a cheque is scanned, the bank sends its image and MICR data immediately to the clearing house.
This system removes the need to wait for scheduled clearing batches. As soon as the drawee bank receives the cheque image, it verifies the details and electronically approves or rejects the cheque.
If the drawee bank does not respond within the confirmation window, the cheque is automatically treated as approved and settled.
This method significantly speeds up cheque clearance and reduces delays.
What Phase 2 Cheque Clearance Rules Were About
The Phase 2 framework was supposed to further accelerate cheque clearance starting from January 3, 2026. Under this phase:
Banks would have only three hours to approve or reject a cheque
The three-hour timeline would start after the bank receives the cheque image
If no action was taken within this time, the cheque would be automatically approved and settled
This rule aimed to make cheque processing much faster and more efficient, which would have benefited customers by reducing waiting time for funds.
However, since the RBI has postponed Phase 2, banks are not yet required to follow this three-hour deadline. Customers will have to wait until the RBI announces a new date for the implementation of Phase 2 rules.
