Soon, your bank check will clear within hours, says RBI
What's the story
The Reserve Bank of India (RBI) has announced a significant modification to the check-clearing process, with the aim of reducing clearance time to just a few hours.
The announcement was made by RBI Governor Shaktikanta Das during the Monetary Policy Committee (MPC) meeting today.
This change is expected to significantly improve the efficiency of check transactions and provide account holders with quicker access to funds.
System shift
Transitioning from batch processing to continuous clearing
The current Check Truncation System (CTS) processes check through a batch-clearing cycle that can take up to two working days.
The new system will transition CTS from batch processing to continuous clearing with 'on-realisation-settlement.'
This means that "checks will be scanned, presented, and passed in a few hours and on a continuous basis during business hours. The clearing cycle will reduce from the present T+1 days to a few hours," according to Das.
Cycle reduction
Aim to streamline financial operations
The updated system is expected to simplify and speed up the check-clearing process.
The change may streamline financial operations, improve liquidity, and reduce uncertainties associated with check-based transactions.
Both individuals and businesses are expected to see improved liquidity and a more efficient banking experience with this new system.
The RBI will soon release detailed guidelines on this new system, providing further clarity on how the transition will be implemented.