Banking Fundamentals Training SESSION-10

CLEARING CLEARING

CLEARING CLEARING IS ONE OF THE ACTIVITIES A BANK UNDERTAKES AS PART OF ITS BUSINESS. CLEARING ACTIVITIES CAN BE DIVIDED INTO INWARD CLEARING OUTWARD CLEARING

CONCEPTS Clearing Process Clearing House Functionality Clearing Operations at Branch

CLEARING TERMINOLOGY Drawee / Paying Bank Collecting Bank Beneficiary Instruments Regional Clearing Centers

INWARD-OUTWARD CLEARING INWARD CLEARING The process where instruments are received at the branch for payment/debit to their accounts OUTWARD CLEARING The process where instruments are sent for collection to other banks/branches

INWARD CLEARING Cheques issued by the customers are received from RBI/SBI/Clearing House The bank verifies whether the cheques are drawn properly. Properly drawn cheques are debited to the respective accounts of the customers subject availability of funds in their account. In case of non-availability of funds, the cheques will be returned to the presenting bank with appropriate reasons/memo.

Controls It is the duty of the bank to verify that the validity of the cheques in terms of Date Signature of the customer Words and figure are matching Any material alteration The sum of the total cheque honoured and rejected should tally with the inward figure given by the Clearing house.

OUTWARD CLEARING Cheques deposited by the the customers are sent to RBI/SBI/Clearing House for collection Bank prepares the total sum of claim to individual banks and summary of the total claim made the particular bank. Next day the presenting bank will receive the status from the respective banks. In case of return, the original instrument along with the reason for rejection is received.

SHADOW BALANCE In ourward clearing as and when the Cheques are sent to the clearing house, we credit the customer account with the appropriate money. Even though the account is credited, it is not allowed to be withdrawn by the customer and is kept in the SHADOW BALANCE. Only on successful honour of the instrument shadow Balance is transferred to the Actual Balance.

CLEARING CYCLE OUTWARD CLEARING INWARD CLEARING Open the Zone Lodging of Instrument Released to Shadow Balance Regularization Closing the Zone INWARD CLEARING Validation Report Generation Rejections if any Posting Closing the zone

RECONCILIATION FAVOUR : When the OUTWARD clearing amount is more than the INWARD Clearing Amount AGAINST : When the OUTWARD clearing amount is less than the INWARD clearing amount. In case of single Branch The RBI/SBI is credited or debited based on FAVOUR or AGAINST

RECONCILIATION In case of multi branches in the city FAVOUR IN CLEARING will be passed on to the Regional Clearing Center by DEBITING THEM AGAINST IN CLEARING will be passed on the to the Regional Clearing Centre by CREDITING them.

Thank You