"Check clearing times reduced from two days to hours."

Mumbai: As part of a significant move to make it easier for people to conduct business in the nation, RBI Governor Shaktikanta Das announced on Thursday that the RBI intends to cut the clearance time needed for bank checks to a few hours.

As of right now, the Cheque Truncation System (CTS) allows for batch processing of checks, with a clearing cycle of up to two business days. According to Das, continual clearing with "on-realization-settlement" in CTS is suggested as a way to shorten the clearing cycle.

This implies that on the day of presentation, checks will be cleared in a few hours. The RBI head continued, "This will expedite check payments and benefit both the payer and the payee."

The act of substituting the physical movement of a check issued by a drawer from the presenting bank to the paying bank branch is known as "cheque truncation." Rather of the actual check being mailed, the clearing house transmits an electronic image of the check together with pertinent details including the presenting bank, date of presentation, and MICR band to the paying branch.

Therefore, unless there are special circumstances for clearing, there is no need to transfer the physical instruments between bank branches thanks to check truncation. This successfully removes