Cheque
clearing is the process of moving a cheque from the bank in which it was
deposited to the bank on which it was drawn, and the movement of the money in
the opposite direction. This process is called the clearing cycle and normally
results in a credit to the account at the bank of deposit, and an equivalent
debit to the account at the bank on which it was drawn.
Inward Clearing :
Inward clearing is a process whereby the HO dealing
with clearing house receives various types of negotiable instruments that are
drawn on it by the customers.
An employee handling Inward Clearing operations in
the HO dealing with Clearing House will receive a bunch of inward cheques from
the local clearing house for processing. He has to scrutinize them and enter
them in an Inward Clearing zone and Pass or Reject them.
Given below are some of the key terms used in
inward clearing process.
|
|
1
|
Clearing
|
Process through which different Banks/Financial Institutions
exchange the instruments (cheques, Demand Drafts and so on) drawn on them
|
2
|
Clearing House
|
A place where representatives of Banks meet at specified times, to
exchange instruments and workout the net balances against each other
|
3
|
Drawee bank
|
The Bank on whom the instrument is drawn.
|
4
|
Collecting Bank
|
The Bank that presents the cheque, collects the proceeds and credits
it to the beneficiary’s account
|
5
|
Payee / Beneficiary
|
The person to whom the proceeds(amount) of the instrument need to be
credited.
|
6
|
Outward reject
|
A cheque which is sent in outward clearing but is rejected by the
other bank for various reasons. It is
captured in the inward clearing process
|
7
|
Inward
reject
|
Instrument
received as a part of inward clearing and returned to the presenter
Bank/Branch on account of non-payment for a specified reason.
|
8
|
Instrument
|
Any Negotiable instrument
like Cheque/Demand Draft/Interest Warrant/Dividend Warrant etc.
|
9
|
Zone code
|
All the member banks meet at Clearing House at specified time. This can happen more than once in a day
depending upon the business volume/places/necessity Each such Meeting is
termed as a “Zone” in Finacle.
|
10
|
Transaction code (TRAN.
CODE)
|
Denotes the type of instrument such as, SB account cheques, Demand
draft, Dividend warrant, etc.
|
Outward Clearing :
A Customer of
Post Office deposits a cheque for collection, drawn on another bank
Counter PA at
SO will prepare a cheque list and send to the HO for clearing.
An employee handling Outward Clearing operations in the HO will receive a
bunch of outward cheques from Customers and SOs for clearing. He has to
scrutinize them and enter them in the Outward Clearing zone and prepare a
cheque list and send to the Clearing House for clearing.
Given
below are some of the key terms used in the outward clearing process.
|
|
1
|
Clearing
|
The
members (Post offices, Banks or FIs) of a Local Clearing House exchange the
instruments (cheques, Demand Drafts and so on) drawn on them and issued by
them for debiting and crediting the proceeds respectively, through a net
settlement process.
|
2
|
Clearing House
|
A
place where representatives of all FIs meet at specified time, to exchange
instruments and workout the net balances against each other.
|
3
|
Clearing Zone
|
A
Zone in Finacle identifies the time and instrument-value-based segregation.
For example, there could be separate zone for High Value Instruments, MICR
instruments and non-MICR instruments.
Instruments are lodged and sent to clearing house depending on the
segregation and on the time to the clearing house.
|
4
|
Drawee Post
Office/FI/Bank
|
The
Post Office which receives the instrument drawn on it.
|
5
|
Collecting Post
Office/FI/Bank
|
The
Post Office that presents the cheque and collects the proceeds from the
drawee Post Office, and credits it to the beneficiary’s account.
|
6
|
Beneficiary
|
The
person to whom the proceeds of the instrument need to be credited.
|
7
|
Outward Clearing
|
Any
instrument that is sent for collection and the proceeds are realized.
|
8
|
Inward Clearing
|
Instruments
drawn on the accounts of customers and received for collection from other
institutions on behalf of their customers.
|
9
|
Outward Reject
|
Any instrument that is sent for collection and is
returned unpaid.
|
10
|
Inward Reject
|
Any
instrument which is received for clearing and is returned to the presenter
Bank/Branch on account of non-payment for any reason.
|
11
|
Instrument
|
An
instrument is referred to any Negotiable instruments like Cheque, Demand
Draft, Interest Warrants, Dividend Warrants and the likes.
|
12
|
Sort/MICR code
|
Sort
code is a 9 digit clearing MICR code where the first 3 digits is a city
code, next 3 digits isa bank code and the last 3 digits is the branch code.
|
13
|
Float balance
|
It
is a sum of all the instruments which are lodged in outward clearing zones for
the day.
|
14
|
Shadow balance/
un-cleared balance
|
During
outward clearing, the Post office releases the credit to the customer’s
account. However, that amount is unavailable for withdrawal because the
instrument presented by the customer is subject to realization at the drawee
branch.
|
15
|
Release to Shadow
Balance
|
A
process of crediting the proceeds of funds in clearing to the customer’s
accounts, but will not be made available for withdrawal.
|
16
|
Regularization
|
The
amount that has been marked as a shadow balance is made available to the
customer.
|
17
|
Set
|
A
bunch of pay-in-slip/credit vouchers and instruments (Cheque, Demand Draft,
Banker’s Cheque and the like) where the credit leg (Amount as per
pay-in-slip/credit vouchers) and the debit leg (Amount as per cheque, Demand
draft, Bankers cheque) is balanced.
|