In a significant move towards the modernization of the banking sector, the Reserve Bank of India (RBI) has announced that cheques will be cleared within a few hours, compared to the current processing time of two to three days. This announcement was made by the RBI Governor at the Monetary Policy Committee meeting on August 8, 2024.
What is Continuous Clearing of Cheques?
Continuous cheque clearing has been proposed through the 'on-realisation-settlement' Cheque Truncation System, replacing the current T+2 working days cycle to enhance efficiency and accelerate payments. At present, cheque clearing via the Cheque Truncation System (CTS) occurs in batch processing mode. Once the proposed system is implemented, cheques will be cleared within a few hours of being presented. This quick clearance system will benefit both the payer and the payee.
Advantages of Continuous Cheque Clearing in Banking
Continuous cheque clearing is good news for banking customers. Some of the benefits are:
- Quick Availability of Funds: Funds will be cleared much faster, within hours, similar to NEFT and RTGS.
- Minimized Settlement Risk: Due to continuous clearing, the time required for the full cheque processing cycle is minimized, which also reduces settlement risk.
- Enhanced Customer Experience: Quicker clearing times would lead to higher customer satisfaction, as delayed cheque clearance is often a source of frustration.
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Operational Efficiency: The physical workload associated with processing cheques will be eased due to streamlined processes.
How Will RBI's New Cheque Clearing Guidelines Impact Banking Customers?
The RBI’s decision to speed up cheque clearance, comparable to NEFT and RTGS, is likely to positively impact the banking experience. It will be significantly faster and more reliable for customers who rely on cheques for high-volume payments. This is especially crucial for businesses and individuals who need quick access to funds for operations.
It would also reduce the time required to clear a cheque, making the banking system more efficient and facilitating smoother transactions between financial institutions.
NEFT, RTGS and Cheque Clearing Times Difference
NEFT transfer and RTGS are methods used to transfer money electronically; unlike these two methods, both differ from each other because of their processing nature and speed.
- NEFT (National Electronic Funds Transfer): NEFT operates with settlements in batches (every 30 minutes) over a 24-hour period. It allows you to send any amount throughout the day.
- RTGS (Real-Time Gross Settlement): RTGS is primarily used for high-value payments and operates in instant transfer mode, meaning transactions are processed instantly.
- Cheque Clearing: In the past, cheque clearing took two to three days due to the physical movement of cheques. However, with the new RBI rules and the implementation of continuous clearing, cheques will now be cleared within a few hours, similar to the speeds of NEFT and RTGS.
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