How cheque clearing works in India
Under the Cheque Truncation System (CTS), the physical cheque stops at the presenting bank and its image and data move through clearing. In October 2025, RBI introduced continuous clearing in CTS, so cheques are presented and confirmed within the same day in batches through business hours.
Faster clearing compresses the time available to check each cheque, which puts pressure on manual verification.
What has to be checked on a cheque
- Signature compared with the account’s reference signature
- Amount in words matching the amount in figures
- Date validity, including stale or post-dated cheques
- MICR line, which carries encoded cheque and bank details
- Signs of alteration or tampering
- Positive Pay details, where the account holder has submitted them
What is Positive Pay?
RBI’s Positive Pay System, introduced from January 2021, lets account holders share key details of cheques (such as date, beneficiary and amount) in advance. Banks check presented cheques against these details. It applies to cheques of ₹50,000 and above at the account holder’s discretion, and banks may make it mandatory for cheques of ₹5 lakh and above.
Where AI helps
AI-assisted cheque processing uses document intelligence to read printed and handwritten fields, computer vision to compare signatures and spot visual anomalies, and machine learning for matching and verification. Configurable rules apply each bank’s policies, and exceptions are routed for human review.
Polisacs Banking Operations Intelligence brings these together for cheque processing, and the same platform extends to cash withdrawal and cash deposit slips.
Frequently asked questions
Can AI fully replace manual cheque verification?
AI is best used to assist: it checks every cheque consistently and flags exceptions, while bank staff make decisions on cases that need judgement.
What is the MICR code on a cheque?
The MICR (Magnetic Ink Character Recognition) line at the bottom of a cheque carries encoded details such as the cheque number and a code identifying the bank and branch.