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The cash book shows a deposit that the bank statement does not, making the cash book balance higher than the passbook at period end.
Identify deposits recorded in the books but not credited by the statement date; treat them as timing items, deduct them when reconciling from the cash book, and confirm they clear next period.
Age each deposit in transit from the deposit date; follow up with the bank if any item is not credited within about a week.
A BRS line listing each deposit in transit with date and amount, all cleared in the following statement or escalated.
A deposit in transit is a cheque or cash you have deposited and entered in your cash book that the bank had not credited by the statement date. Your cash book is therefore higher than the passbook. In a bank reconciliation statement (BRS) starting from the cash book, you deduct it, and it normally clears in the next statement.
Why do some deposits take longer than others?
Different ways of paying money in reach your account at different speeds. Clearing times change over time, so treat this table as a guide and check with your bank.
| How the money came in | When it typically shows on the statement | Likely to be in transit at month-end? |
|---|---|---|
| Local cheque | After it clears through CTS, usually the same or next working day | Yes, if deposited on the last day or two |
| Outstation cheque or cheque on a smaller bank | Can take longer than a local cheque | Yes |
| Cash deposited after the branch cut-off | Next working day | Yes, if deposited on the last day |
| Cash deposit machine | Usually immediately, sometimes next day | Occasionally |
| NEFT, RTGS, IMPS, UPI | Usually within minutes or hours | Rarely |
How long does a cheque take to credit now?
India’s cheques clear through the Cheque Truncation System (CTS), where an image of the cheque travels instead of the paper. For many years local cheques took one to three working days. The RBI has since been moving CTS to continuous clearing, where cheques are scanned and settled through the day, so many cheques now credit much faster.
The exact timing depends on your bank and the phase of the change in force on the day. For reconciliation purposes the rule is simple: if the bank had not credited it by the statement date, it is a deposit in transit, however short the delay.
Worked example
On 30 March a distributor deposits a customer’s cheque of ₹1,86,400 and records it in the cash book the same day. The cheque clears and the bank credits it on 2 April, after the long weekend.
On 31 March:
- Cash book balance: ₹6,40,000
- Passbook balance: ₹4,53,600
Gap: ₹6,40,000 − ₹4,53,600 = ₹1,86,400. That is exactly the cheque.
The BRS from the cash book reads:
| ₹ | |
|---|---|
| Balance as per cash book | 6,40,000 |
| Less: cheque deposited, not yet credited (30 March) | (1,86,400) |
| Balance as per passbook | 4,53,600 |
No journal entry is needed. When the April statement shows the ₹1,86,400 credit on 2 April, you tick it against the March entry and the item is gone.
When is a deposit in transit really a problem?
Most deposits in transit clear within days. As typical practice, follow up if one has not appeared within about a week. Possible reasons:
- The cheque was returned. It may have bounced for lack of funds, a signature mismatch or a date problem. You will need to reverse the receipt.
- It was credited to another account. This happens when a business has several accounts at the same bank.
- It was lost or never deposited. The pay-in slip counterfoil and the bank’s acknowledgement are your evidence.
- It was credited under an unexpected narration. Look for the amount in the statement. A cheque deposited on 31 March and still missing on 7 April deserves a call to the branch.
An item that sits in your BRS month after month is not a timing difference any more. It is an error that needs fixing.
What to read next
- Next in this series: Post-dated cheques in your books and bank reconciliation
- Go deeper: Reconciliation errors: missing and mistimed entries
- Go deeper: Daily vs monthly reconciliation in India
- Related: How do I handle a cheque that bounced in the books?
- For teams: Bank reconciliation software for India
TransactIG matches bank statement lines to your books and keeps unmatched deposits in an exception queue, so ageing items are visible before month-end.