The New Cheque Clearing System is facing issues primarily due to three reasons: widespread technical glitches within the central and participating bank software, inadequate training of bank staff to handle new protocols, and a rushed rollout without sufficient operational readiness.
The ‘Same-Day Check Clearing System,’ introduced by the Reserve Bank of India (RBI) on October 4, was hailed as a significant step towards improving banking efficiency and accelerating fund availability for customers. The primary objective of this new system was to ensure that any cheque deposited in a bank would be cleared on the same day, thereby providing immediate liquidity to businesses. However, according to the Chamber of Trade and Industry (CTI), a prominent industry body, this ambitious plan has devolved into a nationwide crisis in its initial phase of implementation.
Brijesh Goyal, the Chairman of CTI, has addressed a letter to Prime Minister Narendra Modi, urging his immediate intervention in this critical matter. Contrary to the promised same-day clearance, the CTI reports that cheques are not being cleared even after 10 to 15 days, severely impacting business operations across the country.
What is the RBI’s New ‘Same-Day Cheque Clearing System’?
The RBI introduced a major change under the Cheque Truncation System (CTS). The older system processed cheques in batches, typically taking 1 to 3 working days (T+1/T+2 days) for clearance.
The New System (T+0): The new framework, known as ‘Continuous Clearing and Settlement on Realisation,’ was launched in a phased manner starting October 4.
- Objective: The core aim is to match the speed of cheque payments with electronic transfer methods (like NEFT/RTGS), allowing customers to receive funds on the same day (T+0) or within a few hours.
- Process: Under this system, banks are required to scan and send cheques to the clearing house continuously or hourly during a presentation session. The receiving (drawee) bank must confirm the cheque within a stipulated timeframe (e.g., 7 PM initially), or else it is “deemed approved.”
While designed to be faster, more transparent, and efficient, the system’s ground-level reality is one of complete operational breakdown.
Key Issues Plaguing the New System
The CTI’s letter outlines the primary reasons why this potentially beneficial system has turned into a major crisis:
Business Disruption and Shift to Digital Payments: The massive delays are causing disputes among business partners. To mitigate the uncertainty, traders are now advising one another to use electronic methods like RTGS or NEFT for payments, leaving a large segment of Small and Medium Enterprises (SMEs) that still rely on cheques in a precarious position.
Technical Glitches and System Failure: The core problem lies with pervasive ‘technical glitches’ and faults within the banking systems. Bank personnel are reportedly confirming the presence of technical issues that are preventing cheques from being cleared. Reports from the National Payments Corporation of India (NPCI) and banks indicate that both the central clearing system and participating banks experienced “teething issues,” resulting in delays and a high number of cheque rejections.
Lack of Staff Training: Brijesh Goyal highlighted the critical issue of inadequate staff training. The successful implementation of any new, complex system requires fully trained employees. Due to insufficient training, bank staff are struggling to handle the new protocols, scanning procedures, and the continuous clearing cycle, leading to severe operational bottlenecks and manual intervention.
Refusal to Accept Cheques: The crisis has escalated to a point where many banks are reportedly refusing to accept cheques altogether. Some banks are advising customers not to deposit cheques now, but to return later. This effectively amounts to a denial of banking services and creates major inconvenience for businesses.
Severe Delays and Liquidity Crisis: The system intended to provide speed is now causing delays of 10 to 15 days. With the crucial festive trading season of Diwali approaching, rapid cash flow is vital. The failure to clear cheques is leading to cancellation of business orders, stalled payments, and a deepening liquidity crisis in the market.
Frequently Asked Questions (FAQs) on the New Cheque Clearing System
1. What is the RBI’s new ‘Same-Day Cheque Clearing System’?
It is a new framework rolled out by the RBI on October 4. Also known as ‘Continuous Clearing and Settlement on Realisation,’ its goal is to reduce cheque clearance time from several days (T+1/T+2) to the same day (T+0) under the Cheque Truncation System (CTS) by continuously clearing cheques throughout the business day.
2.Why is the new system causing problems?
The system is facing issues primarily due to three reasons: widespread technical glitches within the central and participating bank software, inadequate training of bank staff to handle new protocols, and a rushed rollout without sufficient operational readiness. This combination has led to cheques taking up to 10 to 15 days to clear.
3.What is the impact on traders and businesses?
Traders are facing a severe liquidity crisis. Their payments are stuck, business orders are being cancelled, and they are struggling to meet their financial commitments. The disruption is particularly critical ahead of the crucial Diwali festive season, where cash flow is essential for trade.