Cheques can be issued to a person holding a bank account in a bank branch in the same city or outside. When the cheque is issued to a person outside the same city then it becomes an outstation cheque.
Speed Clearing is a process that makes it possible to clear such cheques, locally. With the help of MICR and Core Banking System (CBS), the entire process of clearing such cheques has become easier and faster. It is also referred to as ‘Grid-Based Cheque Truncation System’.
Before the Speed Clearing Process existed, if you deposited an outstation cheque at your bank, it would first go to the local clearing house in your city and then the cheque would be physically sent to the outstation branch to process the payment. Now, with speed clearing, the cheque is sent to the local branch of the drawee bank for clearance.
Hence, clearance becomes faster with the Speed Clearing System.0