Real-Time Settlement in the Cheque Truncation System

Introduction of Continuous Clearing and Real-Time Settlement in the Cheque Truncation System (CTS)

As announced in the Statement on Developmental and Regulatory Policies dated August 8, 2024, the Cheque Truncation System will shift from batch-based clearing to a continuous clearing model with settlement upon realisation.

The migration will take place in two stages:

• Phase 1 – effective from October 4, 2025
• Phase 2 – effective from January 3, 2026

Detailed operational guidelines are provided in the Annex.

All banks are expected to:

• Educate customers about the new cheque clearing process, and
• Ensure readiness for participation on the respective implementation dates.

This directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Annex

Operational Framework for Continuous Clearing and Settlement on Realisation in CTS

1. Single presentation window with ongoing transmission

• A single presentation session will operate daily from 10:00 AM to 4:00 PM.
• Branches must scan and forward cheques to the clearing house promptly upon receipt, without delay.
• The clearing house will release cheque images to the respective drawee banks on a continuous basis.

2. Continuous inward processing and confirmation

• The confirmation session will run from 10:00 AM to 7:00 PM.
• For each cheque received, the drawee bank must issue:
  • A positive confirmation for honoured cheques, or
  • A negative confirmation for dishonoured cheques.
• Every cheque will carry an Item Expiry Time indicating the latest permissible time for confirmation.
• Drawee banks must process and respond to each item in real time as images are received, sending confirmation to the clearing house immediately after processing.

3. Confirmation timelines

• Phase 1 (Oct 4, 2025 – Jan 2, 2026): All confirmations (positive or negative) must be completed by 7:00 PM. Any item not confirmed by then will be treated as approved and included in settlement. The Item Expiry Time will be set at 7:00 PM for all cheques.
• Phase 2 (From Jan 3, 2026): Item Expiry Time will be set to T+3 clear hours from the end of the hour in which the cheque was received.
  • Example: A cheque received between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM.
  • Items not confirmed within this period will be deemed approved and settled at the expiry time.

4. Real-time settlement

• No settlement entries will be posted at the time of cheque presentation.
• Hourly settlements will begin at 11:00 AM and continue until the end of the confirmation session.
• Settlements will be based on positive confirmations and deemed approvals only.
• No settlement entries will be made for cheques receiving a negative confirmation.

5. Credit to customers

• After each settlement cycle, the clearing house will send confirmation status to the presenting bank.
• Presenting banks must credit customers promptly—no later than 1 hour after settlement—subject to the bank’s standard risk controls.

Notification

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