Cheque Clearing

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Cheque Clearing means processing a cheque from one bank to another by transferring the amount mentioned on the cheque to the payee’s account. The two most commonly used forms of cheque clearing systems are:

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Encash a cheque

Process of encashing a cheque depends on whether it is a bearer cheque or order cheque. There are multiple modes for the same.

Endorsing cheques

By endorsing the payee can use the same order cheque to pay to someone else by writing that person’s name behind the cheque and signing it.

Cheque Bouncing

A cheque is said to have been ‘bounced’ or ‘dishonoured‘ is when it is deposited or presented for payment but could not be encashed by the holder of the cheque.

Order Cheque

An order cheque is a cheque where only the person or party in whose name the cheque has been drawn, can withdraw the cash.

Cheque Truncation System

Cheque truncation is a form of cheque clearing system. It digitises a physical paper cheque into a substitute electronic form.

Crossed Cheque

Crossing a cheque means that it cannot be transferred to anyone else. These cheques can only be credited to the payee’s account.