The Reserve Bank of India (RBI) has clarified the long-standing question of whether using "Lac" instead of "Lakh" on cheques will lead to their cancellation. While both terms are used colloquially to represent one hundred thousand (100,000) in the Indian numbering system, "Lakh" is the preferred and officially recognized term in banking.

According to the RBI, the correct term to use on cheques is "Lakh". This term is officially mentioned on the RBI website and used on all bank-issued cheques. The term "Lac" is not part of official banking terminology.

Despite this preference, the RBI has not issued any strict regulation mandating the use of "Lakh" and cheques are unlikely to be invalidated if "Lac" is used. A bank official confirmed that both "Lakh" and "Lac" are accepted by banks. Therefore, using "Lac" instead of "Lakh" is unlikely to result in a cheque being rejected.

However, it is still recommended to use "Lakh" to avoid potential confusion. The term "Lac" can also refer to a sealing or varnishing material, which might create misunderstanding. Proper usage ensures clarity and reduces the chances of errors in transactions. Whether issuing or receiving a cheque, following this guideline can help maintain precision and prevent avoidable rejections.

To further streamline and modernize the cheque clearing process, the RBI is implementing a new system starting October 4, 2025, called Continuous Cheque Clearing (CCC). This system aims to significantly reduce the time it takes for cheques to clear, potentially making funds available within hours instead of the current one to two business days.

Under the new system, cheques deposited at bank branches between 10:00 AM and 4:00 PM will be scanned and sent immediately to the central clearing house. The clearing house will then release the cheque images to the drawee banks continuously. Drawee banks must confirm whether they will honor or dishonor the cheque by 7:00 PM. Failure to respond by this deadline will result in the cheque being deemed approved. Settlements will be calculated hourly from 11:00 AM to 7:00 PM.

The implementation of CCC will occur in two phases:

• Phase 1 (October 4, 2025 – January 2, 2026): Drawee banks must confirm cheques by 7:00 PM.
• Phase 2 (Starting January 3, 2026): Drawee banks will have a shorter "item expiry time" of T+3 clear hours to confirm cheques. For example, a cheque received between 10:00 AM and 11:00 AM must be confirmed by 2:00 PM.

This transition to CCC is expected to enhance liquidity, reduce settlement risk, and improve customer experience. Banks are required to adapt to the new system and inform customers of the updated cheque clearing timelines.