Clearing:

 mutual settlement of claims

 among member banks
 agreed time and place
 As per instruments drawn
Clearing House
 The place were member banks agree to meet, through
their representatives
 net amount payable or receivable is settled through
an account kept with the controlling bank
 SBI – State Bank of India
 Clearing can be classified as
 Counter clearing
 Non – MICR
 Magnetic Ink Character Recognition
 Cheque Truncation System
Counter Clearing
 Known as manual clearing
 Directly sent to banks through courier or through
bank officials.
 Out-dated
 Co-operative Banks
Non – MICR
MICR
 Magnetic 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:
 Inward
 Inward Return
 Outward
 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 Returns
 Which 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
Outward
 When 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 Returns
Instruments which are return by paying bank due to
specified reason through the clearing house.
System generated memos will be attached
PROCESS
Statement from clearing house

Favour

Adverse
CTS

Cheque 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 banks

Size
PROCESS