•Branches normally collect all the local cheques and other instruments deposited by
customers and after ensuring they have all the relevant details send them to their service
branch. The service branch then present these at the clearing-house.
•With regard to outstation cheques practices can differ:
–Some banks send the instruments to branches they have in the locations where the banks on
whom the instruments are drawn for collection.
–Others hand over the instruments to a large bank who have branches in multiple locations
–The bank can also participate in National Clearing. This is managed by the Reserve Bank.
Cheques drawn on metropolitan centres listed in are cleared in eight days. In other cases
cheques drawn on other centres are cleared in fourteen days except those drawn on state
capitals (other than North Eastern States and Sikkim) where they are cleared in 10 days.
–If there are delays banks are expected to pay interest for the period of delay at the rate
applicable for a fixed deposit for the period of delay beyond the stipulated days. If the delay
is abnormal then penal interest at the rate of 2% above the fixed deposit rate has to also be
•Cheques are posted to the representative branch or correspondent branch for presentation
in the clearing-house in the outstation centre.
•On realization, the proceeds are remitted to the original presenting bank for credit to the
•There is often considerable delay in the payment transaction both for the recipient of the
funds as well as the banks involved.
•In the interest of the customer, the Reserve Bank has directed that banks should give
immediate credit for all outstation instruments upto Rs. 15,000 to individuals who are
maintaining satisfactory accounts. Customers will have to bear service and postal charges. If
a client deposits two outstation cheques below Rs. 15,000, he may only draw upto Rs. 15,000.
The bank’s exposure is thus limited to Rs. 15,000. In the event of the cheque being returned