RBI To Introduce Continuous Clearing and Settlement Realisation in CTS in 2 Phases

Current Context: On 13th August 2025, The Reserve Bank of India (RBI) will transition the Cheque Truncation System (CTS) to a Continuous Clearing and Settlement on Realisation model in two phases.

• Phase 1 begins on October 4, 2025, and Phase 2 on January 3, 2026.
• The current batch-based system (T+1 or T+2) will be replaced by same-day hourly settlements.
• Cheques will be scanned and sent continuously between 10 AM to 4 PM, with confirmation by drawee banks till 7 PM.
• In Phase 1, cheques not confirmed by 7 PM will be deemed approved; in Phase 2, confirmation must occur within T+3 hours of presentation.
• This move aims to reduce settlement risk, improve customer experience, and enhance banking efficiency.

Question:

Q.1 What is the major change in settlement under the Reserve Bank of India (RBI)’s Cheque Truncation System (CTS) reform?
a) Settlement will move from T+2 to T+5
b) Settlement will shift to same-day hourly settlements
c) Settlement will continue in T+1 batches
d) Settlement will be weekly instead of daily

Answer: b) The Reserve Bank of India (RBI) will replace the current batch-based (T+1/T+2) settlement system with same-day hourly settlements.