RBI Cheque Clearing Guidelines: CTS Rules and Timelines

The Cheque Truncation System, or CTS, is the RBI's image-based cheque clearing system. Under CTS, when a cheque is deposited at a bank, the presenting bank captures a high-resolution electronic image of the cheque along with the MICR data. This image, and not the physical cheque, is transmitted through the clearing system to the drawee bank for payment.
 

The physical cheque stops at the presenting bank and does not move further in the clearing process. This is what "truncation" means: stopping the flow of the physical cheque and replacing it with an electronic image. CTS was implemented in phases across India starting in 2008. With effect from October 13, 2023, the three earlier CTS grids covering New Delhi, Chennai, and Mumbai were merged into a single National Grid managed by the National Grid Clearing House in Chennai. All banks across the country are required to be connected to CTS, as stated by the RBI.

How continuous clearing works under the updated RBI guidelines

In August 2025, the RBI issued a circular dated 13 August 2025, transitioning CTS from a batch processing model to a Continuous Clearing and Settlement on Realisation framework. This change was implemented in two phases, with Phase 1 from 4 October 2025 and Phase 2 from 3 January 2026.

Under the new system:

• Cheques are presented to the clearing house continuously between 10:00 AM and 4:00 PM on working days
• Drawee banks have a continuous confirmation window from 10:00 AM to 7:00 PM to process and confirm or dishonour cheques
• Each cheque has an Item Expiry Time, which is the latest time by which the drawee bank must respond. If no response is received by this time, the cheque is considered deemed approved and included in the next settlement
• Settlement happens hourly from 11:00 AM onwards, based on positive confirmations
• Once settlement is posted, the presenting bank releases payment to the customer within one hour, subject to usual safeguards

This replaced the earlier batch processing model where clearing could take up to two working days. Cheques are now typically cleared within a few hours of presentation on the same working day.

What is the Positive Pay System and when does it apply

The Positive Pay System, or PPS, is an additional fraud prevention mechanism introduced by the RBI under CTS. It requires the person issuing a cheque to electronically submit key details of that cheque to their own bank before it is presented for clearing. The clearing house then cross-checks these details against the actual cheque image when it arrives. Key details submitted under Positive Pay typically include the cheque date, payee name, and the amount. Any discrepancy between the submitted details and the presented cheque is flagged to both the drawee bank and the presenting bank.

The RBI has advised banks to enable the Positive Pay facility for all account holders issuing cheques of Rs. 50,000 and above. While using PPS is at the discretion of the account holder for cheques up to Rs. 5,00,000, banks may make it mandatory for cheques of Rs. 5,00,000 and above.

If you are issuing a cheque of Rs. 50,000 or more for EMI or any other payment, check whether your bank has enabled and requires Positive Pay registration for that amount before the cheque is deposited.

Rules for filling cheques correctly under CTS guidelines

Cheques with alterations or corrections are not accepted under CTS. The RBI has specified that no changes or corrections can be made on a cheque after it has been written, except for date validation in certain cases. If you need to change the payee name, the amount in figures, or the amount in words, you must use a fresh cheque leaf.

Key rules for filling a cheque correctly under CTS:

• Use image-friendly coloured ink that produces a clear scan. The RBI has not prescribed a specific ink colour but recommends colours that show up clearly in both greyscale and black and white images
• Use permanent ink to prevent fraudulent alteration of the contents
• Do not use correction fluid or make any overwriting on the cheque
• Ensure the payee name, amount in figures, and amount in words are all legible and match exactly
• Banks are required to provide an acknowledgement if you request one when depositing a cheque at a branch counter

Three images of each cheque are captured in CTS: front greyscale, front black and white, and back black and white. All written content on the cheque must be clearly visible in each of these image types.

If a cheque is dishonoured or returned:
The drawee bank returns the cheque image data to the clearing house during the confirmation session. The clearing house routes the return data to the presenting bank, which then informs the depositing customer. The cheque is treated as unpaid, and any credit held pending clearance is reversed.
 

If a cheque is lost in transit or during clearing:
The RBI has specified that if a cheque is lost in the clearing process, the bank must immediately inform the presenting customer. The customer should then ask the drawer to stop payment on the lost cheque and also be aware that other cheques issued anticipating the credit from the lost cheque may be dishonoured due to the non-credit of that amount.
 

If you have a grievance about a cheque:
If a bank fails to pay or delays clearing a cheque without valid reason, you can first raise a complaint with the bank. If the bank does not respond within 30 days, you may file a complaint under the RBI Integrated Ombudsman Scheme at cms.rbi.org.in or call the toll-free number 14448, available between 9:30 AM and 5:15 PM.