What is the mechanism of Cheque clearing?

Question

Procedure

Answer 1

When A deposits a cheque in to his account in the bank for local collection.then it is sent through clearing for claiming money from the concerned bank by the bank in which A deposited a cheque for crediting to his account.After getting money from that bank A`s bank will credit the amount to A`s account.Normally banks do not allow you to withdraw the money before three days from the day it was deposited.We can also say after collection of money from the concerned up to next day you are not allowed to withdraw the money.The bank thinks that in case the cheque comes back with objection they will be in trouble,that is why they do not allow you to withdraw for three days.The total procedure may take 3-4 days.

Answer 2

The Cheque clearing procedure starts with the deposit of cheque with the bank. If the bank and the account of the both the parties related to the transaction was belong to the same branch then it will be directly debited and credited without any delay.
If the bank is same and not the same branch then it will clear the transaction by the same day or on the next day by some internal arrangement.
If the Cheque was the cheque of the other bank in the same city then it will go to the clearing house and all the cheques will be exchanged there between the banks then the cheque will be deposited with the Reserve Bank of India and then Cheque will be cleared all the Cheques by cancelling the amount payable to the extent which has needed the lower amout of clearance and then the remaining will be credited or debited according to the requirement by the Reserve Bank of India.
If it was the outstation Cheque then it will be sent by the banks branch to the headoffice and then it will be sent to the concerned place if it has the branch or it will cross it on the name of the other banker who has the branch there and get it cleared by the same process for the clearance of the instation Cheque

Answer 3

Cheque Clearing Cycle

Answer 4

HI,


The process of cheque payment starts when a payer gives his personal cheque to the beneficiary. In order to get the actual payment of funds, the receiver of the cheque has to deposit the cheque in his bank account. If the beneficiary has an account in the same bank in the same city then the funds are credited into his account through internal arrangement of the bank. If the beneficiary has an account with any other bank in the same or in any other city, then his banker would ensure that funds are collected from the payer’s banker through the means of a clearing house.

A clearing house is an association of banks that facilitates payments through cheques between different bank branches within a city / place. It acts as a central meeting place for bankers to exchange the cheques drawn on one another and claim funds for the same. Such operations are called as clearing operations. Generally one bank is appointed as in-charge of the clearing operations. Each clearing house has uniform regulations and rules for the conduct of its operations. There are more than 1000 clearing houses operating all over the country facilitating cheque payments.

Generally, if a cheque is to be paid within the same city (local cheque), it would take 2-3 days. In some large cities, there is a system called High Value Clearing which facilitates completion of cheque clearing cycle on the same day and the customer depositing the cheque is permitted to utilise the proceeds next day morning. However, coverage of this High Value Clearing is very limited and usually available at the branches in the main business area.

In the case of outstation cheques, the time taken would vary from three to ten days. Regulatory Authority has advised all the banks to publicise their cheque collection policy so that customers have an idea as to when the proceeds would be available for utilisation by the customer. For delay beyond the normal period, the banks are required to compensate the customer (even without customer asking for the same)

The person receiving payment by means of cheques would incur some charges to realise the funds through this bank. In case of local cheques, no charges are levied. In case of outstation cheques, the bank would take some processing / collection charges depending upon the amount of the cheque and the place from where it has to be realised. The charges levied by the banks are generally decided by the Banks’ Association or the banks themselves. Banks are also required to publicise the schedule of service charges.


Hope it suits your requirements.

Regds,

Venkat

Answer 5

http://www.school-resources.co.uk/ChequeClearing.htm

The above one is a pictorial representation for clearance of cheques. Proceed on with the text below.

When you deposit a cheque into your account, your bank which is the collecting bank will send it to specific clearing centres to be sorted and dispatched to the drawee bank for payment. The time taken for the money from the cheque to be credited into your account will depend on the number of days required to clear the cheque. The number of clearing days may be affected by public holidays which fall within the clearing period.

Generally, cheques can be divided into 3 categories:

Generally, house cheques do not go through the clearing process. As such, you will receive your money the next day. However, the time taken may vary from bank to bank depending on the duration required to verify the particulars of payment. Local and outstation cheques however, need to go through the clearing process and the time required for your cheque to be cleared would depend on the location of the branches. Generally, local cheques would be cleared within 2-3 working days. The clearing period for outstation cheques may take 3-8 working days. However, you are advised to check with your bank as to the actual date the funds will be available.

Answer 6

what i remember..that the cheque first is being verified by RBI in INDIA and then RBI gets it checked by the bank of the drawee and then the drawee bank verifies the existence of the account & the amount & the sends back to RBI..which sends it back to the main back which then credits the balance