We all have used the bank cheques to pay or get a cheque as a payment. Cheques are used for long time. In the never ending brink of digital era cheques are still used by many people as a payment especially for legal matters. A cheque is a document that orders a bank to pay the payee the amount mentioned in the cheque from the payer account. The person writing the cheque or payer is known as drawer and the person receiving the cheque is called payee. There are different types of cheques that can be issued by the drawer to the payee and each cheque has a different meaning to know details about the Types of cheque and its Uses.
Cheque Clearing Time
Cheque clearing is a process of moving cash from the drawer account to the payee account. Earlier, RBI provided the banks with option to frame the cheque clearing timings in accordance to the bank policy but recently, the RBI issued the fresh directive which states that the local Cheques must be cleared on the same day or the very next day. This was done by many customer complaints which led the Consumer Court to intervene and directed the Central Bank to regulate new policy regarding the cheque clearing.
For the outstation cheques the time limit set by the RBI for the cheque drawn on state capital and major cities is 7-10 days and for other location it is 14 days. If the bank fails to clear the cheque within the mentioned period then the bank has to pay interest on the cheque amount. The interest rate will be at then FD interest rate. In case of Bank Holidays, the cheque clearing will be delayed meaning the cheques are only cleared on the working days and the above mentioned time limits are of working days.
How Cheque Is Cleared? | Cheque Clearing Process
The process of the clearance of cheque uses a system called CTS (Cheque Truncation System) which was undertaken by the RBI since 2010 to make the cheque clearing process faster. In this process the physical cheque is transformed into an image and the MICR details are collected for the cheque and then these details are transferred to the Central Clearing House. For bank cheque clearing process the following steps are involved-
- The process starts with the payee depositing the bank cheque in the bank.
- Then the cheque goes to the cheque clearing station in the bank branch where the cheque will be processed through the MICR Scanner.
- The MICR Scanned details are then transferred to the Central clearing house and the physical cheque are kept in the collecting branch for future verification.
- At the clearing center the cheque details are verified and on successful verification the balance from the drawer account is deducted.
- The deducted amount is then credited to the account of the payee.
- The drawer will be informed about the transaction at the time of deduction of amount and the payee will be informed when the amount will be credited to the account via SMS.
