1. Banking Fundamentals Training
SESSION-10

2. CLEARING
CLEARING

3. 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

4. CONCEPTS Clearing Process Clearing House Functionality
Clearing Operations at Branch

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

6. 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

7. 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.

8. 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.

9. 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.

10. 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Even though the account is credited, it is not allowed to be withdrawn by the customer and is kept in the SHADOW BALANCE.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.

11. 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

12. 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

13. 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.

14. Thank You