There are drop boxes for cheques (even cash!) these days in Banks to drop the cheques for collecting them for the credit of your account.
That means the trust for the Banking system has gone up among the public. That could also mean time constraint to collect the counter foil. But what happens to the cheques handed over at the counter for a return of a counter foil or those dropped in the drop boxes? How do they get collcetd to our accounts?
We drop the cheques of all possible banks in our bank and get to see the amounts in our accounts a few days later! I used to wonder at this procedure till I saw what happens with those instruments with my eyes.
A small introduction to what is clearing:
The cheques and other instruments are handed over to the original owner bank at a place called Clearing House.
The place where the exchange of instruments occurs and the claims are settled is known as the Clearing House.
But, the clearing house used to be a party house! The staff who carried the cheques to a common place – in this case State Bank of India. Why State Bank of India?
As per Reserve bank of India publications ,
4.3. In India, the clearing system is local and confined to a defined jurisdiction covering all the banks and branches situated in the area under a particular zone. The clearing house is a voluntary association of banks under the management of a bank where the settlement accounts are maintained. Wherever Reserve Bank of India has its office (and a banking department), the clearing house is managed by it. In the absence of an office of the Reserve Bank, the clearing house is managed by the State Bank of India, its associate banks and in a few cases by public sector banks.
Along with the exchange of instruments, we exchanged views on the latest banking policies, the practices in different banks, the opportunities available for knowledge enhancement, the CAIIB guides…
Interestingly a few getting really together – I mean marriages have taken place through those houses!
I feel the fun is lost by the electronic clearing system nowadays!
Posted by Revathi 