CLEARING

Clearing:

mutual settlement of claimsamong member banksagreed time and placeAs per instruments drawn

Clearing HouseThe place were member banks agree to meet, through

their representativesnet amount payable or receivable is settled through an

account kept with the controlling bankSBI – State Bank of India

Clearing can be classified as

Counter clearingNon – MICRMagnetic Ink Character RecognitionCheque Truncation System

Counter ClearingKnown as manual clearingDirectly sent to banks through courier or through

bank officials.Out-datedCo-operative Banks

Non – MICR

MICRMagnetic ink character recognition is a character

recognition technology used in the process of clearing the instruments.

MICR encoding is at the bottom of an instrument which includes bank code bank account number cheque number amount with secret code.

Clearing:InwardInward ReturnOutward Outward Return

Inward When a particular branch receives instruments, which

are on themselves and sent by other member bank for collection is treated as Inward Clearing of that branch.

This branch is known as paying branch

Inward ReturnsWhich are presented by collecting bank to other

banks for payment but it has been returned and unpaid by them due to specified reason through the clearing house.

System generated return memos

OutwardWhen a particular branch receives instruments drawn

on the other bank within the clearing zone and sends those instruments for collection through the clearing arrangement is considered as Outward Clearing for that particular branch.

This branch is known as collecting branch.

Outward ReturnsInstruments which are return by paying bank due to specified

reason through the clearing house.

System generated memos will be attached

PROCESS

Statement from clearing houseFavour Adverse

CTSCheque Truncation System (CTS) is a cheque

clearing system undertaken by the Reserve Bank of India (RBI) for faster clearing of cheques.

Same format for all banksSize

PROCESS

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