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In today's modern banking, various innovative method of banking has come into existence for the benefit of account holders. Anywhere banking, electronic transfer, electronic clearing system, at par payment, net banking etc are means to improve banking transactions and to see that the customers get their money at the earliest possible time. Despite all these modern banking, cheque transaction occupies a key role in an efficient financial system. Cheque is a well recognized valuable security that is used by bank account holders worldwide.
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Meaning of Cheque clearing
The cheque clearing system and electronic transfer of money between two accounts are two different things. In the latter case, no cheque is involved but only an electronic instruction or net banking.
Whenever, a person issues his cheque favouring another person with account payee/cross endorsement, the receiving person has to deposit that cheque in his bank account and get the amount credited by realizing the cheque amount through a clearing system to which all the banks are members. Every City or District has a clearing house for handling such cheques from banks located in the City or District as the case may be. Either local or outstation cheques can be presented for clearance in a clearing house of a particular City or District.
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Conventional method of Cheque clearing
A cheque that is to be cleared for realizing the amount has to undergo a systematic drill involving the following steps:
- Cheques from various customers are recovered in the presenting bank.
- These received cheques are bundled into clearing batch. (normally per day two batches are done)
- Cheque bundle is handed over to a messenger person in a secured box for reaching it to the Clearing House of the City or District.
- Such cheque bundles received from various branches are sorted in the clearing house according to the bank and branch wise.
- The values of the cheques sorted according to bank and branch wise are debited and credited in the respective bank's ledger that is maintained in the clearing house.
- The bank and branch wise sorted cheque bundles are then sent to the respective branches through a messenger person in a secured box.
- On receiving such inward cheques for clearance the respective bank takes on record the individual cheques
- On satisfying the genuineness of the cheques drawn and signature of the drawer, the relevant amount is debited to the respective account and the cheque is preserved as paid instrument.
- In case, where a cheque drawn cannot be honoured on account of any deficiency including lack of sufficient funds, the same is denoted as dishonoured.
- Such dishonoured cheques of the day are bundled by the branch and sent back to the clearing house.
- The clearing house after debiting the amount of dishonoured value from the general ledger of the bank, in turn, forwards the dishonoured cheque to the bank from where it was presented for clearance.
- On receiving the dishonoured cheque, the bank returns the same to the account holder who has presented it for collection.
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Implications of the conventional method
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The complexity of the conventional procedural steps is vulnerable for its foolproof working. It involves considerable amount of time and efforts to get the cheque clearance transaction completed promptly. Even a local cheque would take a minimum of two business days for the amount credited to the payee's account. If the distance of the bank on which cheque is drawn is greater, then the time taken to clear the cheque becomes more. For outstation cheque clearance, some time it may take 5 to 15 days for clearance and getting the amount into the credit of payee. The cumbersome procedure and the delay make the customers unhappily and the banks are finding it difficult to keep the customers satisfied. Further, there is a growing feeling among the customers that the banks are inefficient and they are looking for a solution.
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The banking sector all over the world has been trying to find a business solution through IT so as to speed up the cheque clearing process and to benefits the customers (public). Towards this direction many initiatives have been made from different corners of the World. One of the basic hurdles was as to ensure the actual viewing of the cheque to be cleared for payment by the drawer bank. Even with faster communication, the efficiency of image transfer of each cheque to be cleared over electronic network has its limitations in view of various constraints association with handling of electronic images.
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Taking all the constraints into account and using our innovative technology, we are in possession of a system that can provide a solution for faster image based cheque clearing flow truncating the physical cheques from the existing clearing system. We call our solution as "Insta CrDr" which is a real time image based cheque clearing system. Insta CrDr system uses various in house developed controls and commands including our own security logic to effectively handle the entire business processes. The preservation of scanned images of cheque and their retrieval according to the relevant variables happen at an admirable speed which has no parallel.
Through the solution provided by Insta CrDr, the banks can reduce the potential time for clearing a local cheque to be on the same day and for clearing an outstation cheque within a business day. This would bring a situation where in a customer who deposits a cheque for clearing can take the money out on the same day or the next day.
This system totally eliminates physically sending of bundles of cheques up and down the banks and clearing houses involving time, efforts and huge cost thereof. It will also ensure smoother transaction of the cheque under clearance.
Insta CrDr can provide not only efficiency for retain the satisfaction of customers but also a huge cost savings to the banking sector. The dramatic reduction of time, efforts and cost through Insta Cr Dr would make the cheque clearing system meeting the expectation of the customers. Since the entire cheque clearing transaction handled through Insta CrDr would be under a secured environment free from human interference it will also reduce clearing house frauds and cheque loss that are prevalent as of now.
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- Firstly the cheques that are presented for clearing would be scanned and brought in to the database of the Branch Office version of Insta CrDr system installed the branch levels of the banks.
- Secondly, all those images of clearing cheques are grouped (by the system) and verified and authenticated.
- Thirdly the same get transmitted as out flow to the clearing house through use of high speed secured network.
- Fourthly, in the clearing house such images coming from different branches are sorted out by Control Office version of Insta Cr Dr according to the bank and branch wise and consolidated files are created.
- Fifthly, these files are automatically transferred electronically to the respective branches of various banks wherein the same will be imported as inflow and verified for clearing the amount.
- Sixthly, wherever the cheque that could not be cleared on account of deficiency or lack of funds, such cheque images will get grouped into out flow and in turn reach back the clearing house. From where it will in turn come to the respective branches that originated these cheque images for clearance.
Thus one can appreciate that the Cheque Clearing under Insta CrDr happens smoothly on a real time basis. The data transmission would be under an encrypted environment. The entire business process stated above could be completed instantaneously over a secured network regardless of the distance between the drawer branch and presenting branch.
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Following are the few reasons to opt for Insta Cr Dr cheque clearing system:
- Increases operational efficiency
- Minimize the time for crediting
- Reduces the cost
- Increases customer satisfaction
- Eliminates cheque lost in transit
- Eliminates clearing house frauds
- Helping in catching rogue accounts
- Saves time and efforts
- Brings efficient archive system
- Eliminates the distant barrier
- Reduces the bottle neck and delay
- Brings better customer relationship
- Improves efficiency of banking sector
- Increases productive time of the money
- It is scalable for any type of usage
- Provides operational convenience
- Enhances the reliability of clearing process
- Provides secured payment through cheques
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