Speed Clearing – Frequently Asked Questions(RBI)

Question 1	What is Speed Clearing ?
Answer	Speed Clearing refers to collection of outstation cheques through the local clearing. It facilitates collection of cheques drawn on outstation core-banking-enabled branches of banks, if they have a net-worked branch locally.
Question 2	Why Speed Clearing ?
Answer	As of now, outstation cheques are paid through two channels viz. on Collection basis or through National Clearing (Inter-city Clearing). This requires movement of cheques from the Presentation centre (city where the cheque is presented) to Drawee centre (city where the cheque is payable) which elongates the realisation time for cheques. Speed Clearing aims to reduce the time taken for realisation of outstation cheques.
Question 3	What is “Collection basis” ?
Answer	A person who has an outstation cheque with him deposits it with his bank’s branch. It is called Presenting branch. This cheque is sent for collection to the city where it is payable / drawn called Destination centre or Drawee centre. The branch providing the collection service at the Destination centre is called Collecting branch. On receipt of the cheque, the Collecting branch presents it in local clearing to the Drawee branch or the Destination branch. Once the cheque is paid the Collecting branch remits the proceeds to the Presenting branch. On receipt of realisation advice of the cheque from the Collecting branch, the customer’s account is credited. This, in short, is the process of Collection. When a cheque is taken on Collection basis by a bank, it credits the customer’s account after realisation. Alternatively, in the absence of a collection arrangement at the Destination centre, the Presenting branch will send the cheque directly to the Destination branch for payment.
Question 4	How long does it take for getting credit of an outstation cheque sent (i) on Collection basis and through (ii) National Clearing (Inter-city Clearing) ?
Answer	Generally, it takes around a week to three weeks time to get outstation cheques realised through Collection basis. In case of National Clearing, it takes around a week's time. National Clearing is an arrangement under which the Clearing Houses managed by RBI provide inter-city cheque collection service to member banks of those Clearing Houses.
Question 5	Is National Clearing available in all cities ?
Answer	No. It is available at fifteen cities viz. Ahmedabad, Bangalore, Bhopal, Bhubaneshwar, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram.
Question 6	How does the Local Cheque Clearing work ?
Answer	In Local Cheque Clearing in 61 major centres, cheques are processed at the Clearing Houses on mechanical sorters, using Magnetic Ink Character Recognition (MICR) technology. Local Clearing handles only those cheques that are drawn on branches within the jurisdiction of the local Clearing House. Generally, the distance between the Clearing House and the participating branches is defined, taking into account the local transportation and communication facilities as the cheques have to physically move to and from the Clearing House. For example, for a cheque to be processed in Local Clearing in Mumbai, both the presenting and drawee branches should be within the jurisdiction of the Clearing House in Mumbai.
Question 7	How does the Speed Clearing work ?
Answer	Banks have networked their branches by implementing Core Banking Solutions (CBS). In CBS environment, cheques can be paid at any location obviating the need for their physical movement to the Drawee branch. The concept Speed Clearing combines the advantages of MICR clearing with CBS. Cheques drawn on outstation CBS branches of a Drawee bank can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee bank has a branch presence at the local centre.
Question 8	When will the beneficiary get funds under Speed Clearing ?
Answer	As on date, the local cheques are processed on T+1 working day basis and customers get the benefit of withdrawal of funds on a T+1 or 2 basis. 'T' denotes transaction day viz. date of presentation of cheque at the Clearing House. So, the outstation cheques under Speed Clearing will also be paid on T+1 or 2 basis.
Question 9	How is Speed Clearing an improvement over National Clearing ?
Answer	In case of National Clearing the cheque is realised in around a week's time. Under the Speed Clearing, it would be realised on T+1 or 2 basis viz. within 48 hours. National Clearing is restricted to cheques drawn on the specified locations. Speed Clearing has no geographical limitation. Cheques drawn on any location may be cleared as long as the branch is in CBS. National Clearing necessitates movement of the cheque to the Drawee centre. Speed Clearing facilitates the clearing of such cheques locally without the need to move the cheques to the Drawee centre.
Question 10	Which are the centres where Speed Clearing is presently available ?
Answer	Speed Clearing is currently available in 41 MICR centres.
Question 11	What about charges for cheques cleared through Speed Clearing ?
Answer	Presenting branches are currently permitted to levy charges at a rate not exceeding Rs.150 per cheque (inclusive of all charges other than Service Tax) for cheques of above Rs. 1 lakh presented through Speed Clearing.