What is Bank Clearing

When the bills and financial drafts are within the range of the clearinghouse of a respective area then it is sent for collection through clearing section of a bank. As far as safety is concerned customers get, crossed cheque for the transaction-crossed check cannot be encash from the counter; rather it has to be collected through banking channel i.e., clearing. If a client of a bank received a check of another bank, which is located within the clearing range and deposit the instrument in his account at respective bank, then respective bank will collect the money through clearing house. After received the check bank will credit client account. However, the amount is credited in the customer account but client will not get the money until the check is honored.

Procedures for Bank Collection:

• Received seal is stamped on the cheque
• Crossing of the cheques are done
• Payee’s account credited endorsement is given
• Entries are given in the outward clearing register
• Clearing seal is given
• Cheques are sorted bank wise and entries are given to the computer
• Entries are given in the clearinghouse register before dispatching to the clearing house.