New Delhi:
On Thursday, Governor Shaktikanta Das announced the results of the Reserve Bank’s bi-monthly monetary policy review meeting, stating that the check-clearing cycle will be shortened from the current two business days to just a few hours.
Currently, cheques are cleared in batch processing mode under the Check Truncation System (CTS).
The Governor stated that there is a proposal to speed up the clearing process by introducing continuous clearing with ‘on-realization-settlement’ in CTS.
This means that cheques will be cleared within a few hours on the day they are presented,
speeding up cheque payments and benefiting both the payer and the payee.
Announcement
According to the Governor’s statement at the RBI MPC meeting,
the new system will allow cheques to be scanned, presented, and cleared within a few hours.
Currently, the Check Truncation System (CTS) processes cheques with a clearing cycle of up to two days from the deposit date.
This continuous processing during business hours will reduce the clearing cycle from the current T+1 days to just a few hours.
What is Check Truncation System?
The Check Truncation System (CTS) is a method for clearing cheques electronically rather than handling the physical cheque at the paying bank branch.
The Reserve Bank of India (RBI) implemented this system in 2021 to accelerate cheque clearance.
With CTS, an electronic image of the cheque, along with details such as the MICR code and presenting bank information,
is sent to the paying branch through the clearing house instead of the physical cheque.
RBI Monetary Policy Meeting
The MPC voted 4 to 2 to keep the benchmark repo rate steady at 6.5 percent for the ninth consecutive monetary policy meeting.
The RBI maintained its real GDP growth projection for FY25 at 7.2 percent and its CPI inflation projection at 4.5 percent.
