What
Is 'Cheque Clearing House'?
Let me explain the concept of Cheque Clearing House with an
example.
Ø Suppose a party from
Hyderabad pays you via cheque of Canara
Bank and you have account in SBI,
Mumbai. What you have to do simply is, deposit cheque in your area’s SBI
branch.
Ø When Cheque Clearing
house has not came in to existence,The SBI branch manager would send his Bank
Clerk to Canara Bank’s office in Mumbai to encash the Cheque, money will be
deposited in to your SBI accountwhen the cheque get encashed.
Ø But SBI would be
getting thousands of cheques every day from several other banks. SBI cannot
send its staff to every other bank to get the cash, that’d be extremely
difficult.
Ø To make this easy,
each bank will send a representative to a centralized place where the exchange of
cheques, drawn on all banks will takes place.
Ø This centralized
place is called Clearing House.
Ø Reserve Bank of India
will act as a clearing house.
Ø In cities where RBI’s
office doesn’t exist, usually SBI or other public sector bank acts as the Cheque clearing house.
