Clearing Cheque Through Inward Clearing House
Inward clearing house is the place of central bank of every country. Banks collects cheque amount from each other through clearing house. The process is described below.
Suppose Mr. Noman is a client of ABC Bank and Mr. Farhad is a client of XYZ Bank. Mr. Noman gives a cheque amounting $1000 to Mr. Farhad, then Mr. Farhad deposits the cheque to his bank XYZ. The authority of XYZ bank has to collect $1000 from ABC bank since Mr.Noman is a client of ABC bank. In doing so, XYZ bank will send the cheque of ABC bank to inward clearing house of the central bank. Now the clearing house will send the cheque to ABC bank to debit/deduct $1000 from Mr. Noman’s account and credit the amount to clearing house account of ABC bank.. ABC bank will do it and inform the clearing house. Clearing house will first debit its its accounts and credit the account of XYZ bank. Mention should be made here that central bank holds the accounts of all banks in a country. So the demanded $1000 of XYZ is credited to their general account of central bank. Now XYZ bank will debit/deduct their general account amounting $1000 and credit the account of Mr. Farhad. And that is how XYZ bank collects the amount from ABC bank. All the banks does the same process to clear the cheque of various banks through inward clearing house. All the process is done with documents and papers. It takes three days to clear a cheque through clearing house.
Suppose Mr. Noman is a client of ABC Bank and Mr. Farhad is a client of XYZ Bank. Mr. Noman gives a cheque amounting $1000 to Mr. Farhad, then Mr. Farhad deposits the cheque to his bank XYZ. The authority of XYZ bank has to collect $1000 from ABC bank since Mr.Noman is a client of ABC bank. In doing so, XYZ bank will send the cheque of ABC bank to inward clearing house of the central bank. Now the clearing house will send the cheque to ABC bank to debit/deduct $1000 from Mr. Noman’s account and credit the amount to clearing house account of ABC bank.. ABC bank will do it and inform the clearing house. Clearing house will first debit its its accounts and credit the account of XYZ bank. Mention should be made here that central bank holds the accounts of all banks in a country. So the demanded $1000 of XYZ is credited to their general account of central bank. Now XYZ bank will debit/deduct their general account amounting $1000 and credit the account of Mr. Farhad. And that is how XYZ bank collects the amount from ABC bank. All the banks does the same process to clear the cheque of various banks through inward clearing house. All the process is done with documents and papers. It takes three days to clear a cheque through clearing house.
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