The Reserve Bank of India has postponed the implementation of Phase 2 of its faster cheque clearance mechanism, originally scheduled to commence on January 3, citing the need to provide banks additional time to streamline their operations following challenges encountered during the initial rollout. The announcement was made through a circular issued on December 24.

Implementation Challenges Lead to Postponement

The second phase of the 'Continuous Clearing and Settlement on Realisation in Cheque Truncation System' has been delayed indefinitely after banks experienced teething issues during Phase 1, which began on October 4. The central bank acknowledged these operational difficulties in its decision to postpone the next phase, while Phase 1 of the CCS framework will continue to operate as usual.

Revised Session Timings

Alongside the postponement, the RBI has adjusted the operational timings for cheque processing sessions under the existing Phase 1 framework:

What Phase 2 Was Meant to Change

Under the proposed Phase 2, banks would have been required to approve or reject cheques within three hours of receiving their digital images. If a bank failed to respond within this time frame, the cheque would have been automatically approved and settled. The tighter timeline was aimed at further speeding up cheque clearance and ensuring faster credit of funds to customers.

Current Phase 1 Operations

Under the existing Phase 1 framework, the RBI introduced the Continuous Clearing and Settlement system under the Cheque Truncation System to move away from the traditional batch-based cheque clearing process. Banks scan cheques as they receive them and send the images along with MICR data to the clearing house in real time, rather than waiting for fixed clearing batches. Drawee banks must confirm cheques presented to them by the end of the confirmation session at 7 p.m., and cheques not explicitly confirmed or rejected by this deadline are automatically deemed approved and included for settlement.

System Transformation Impact

The continuous clearing system represents a significant advancement in India's payment infrastructure, transforming the traditional cheque clearing process from a two-working-day cycle to a matter of hours. With Phase 2 now delayed, the most time-sensitive element of the new cheque clearance system will take longer to be implemented. The RBI said it will announce a fresh date for Phase 2 separately, underscoring the central bank's commitment to ensuring a smooth transition and optimal functioning of the new cheque clearance system.

The Reserve Bank of India (RBI) has released draft rules that could transform transparency in foreign exchange transactions by requiring banks and authorised dealers to disclose all costs upfront. The proposed regulations target the persistent problem of hidden charges that have long plagued customers making cross-border payments for education fees, travel expenses, and overseas investments.

Comprehensive Disclosure Requirements

The draft circular mandates that authorised dealers, including commercial banks, must clearly reveal all components of foreign exchange transactions before customers commit to any deal. This transparency framework covers three key areas that have traditionally been sources of unexpected costs:

The proposed rules apply to the most commonly used foreign exchange transaction types, ensuring broad coverage across different customer needs:

• Cash transactions (T+0): Same-day settlement deals
• Tom transactions (T+1): Next business day settlement
• Spot contracts (T+2): Two business day settlement period

Building on Previous Regulatory Measures

This initiative represents the latest step in the RBI's ongoing effort to strengthen disclosure norms in the foreign exchange market. The regulator had already directed authorised dealers to share mid-market mark, bid and ask prices for foreign exchange derivative and foreign currency interest rate derivative contracts with retail users before execution.

The enhanced requirements extend these transparency measures to cover the full spectrum of retail foreign exchange transactions, addressing gaps that have allowed hidden fees to persist in cross-border payments.

Impact on Retail Customers

The new framework specifically targets improvements for retail users who have historically faced challenges in understanding the true cost of international transactions. By mandating upfront disclosure of all charges, the RBI aims to enable customers to:

• Accurately assess total transaction costs before committing
• Compare different service providers effectively
• Make informed decisions based on complete pricing information
• Understand how margins are applied across different transaction types

Taneia Bhardwaj, South Asia Expansion Lead at Wise, highlighted that the draft circular's operational focus on showing remittance fees, exchange rates and conversion charges upfront addresses long-standing transparency gaps in cross-border payments.

Regulatory Scope and Classifications

The rules apply to authorised dealers operating under RBI regulations, including authorised dealer category-I banks and standalone primary dealers with category-III authorization for foreign exchange transactions. The framework establishes clear distinctions between customer categories:

Implementation Timeline

The RBI has opened the draft circular for public consultation, with feedback accepted until January 9, 2026. This extended consultation period allows industry participants and stakeholders to provide input on the proposed transparency measures before final implementation.

If adopted, these rules could fundamentally change how foreign exchange transactions are priced and presented to customers, potentially reducing unexpected costs and improving confidence in cross-border payment services across India's growing international transaction market.