Clearing House

Question : 01 :: What do you know about Clearing House?

Ans: Clearing stands for mutual settlement of claims made in among member banks at an agreed time and place in respect of instruments drawn on each other.

Clearing House is an arrangement under which member banks agree to meet, through their representatives, at appointed time and place to deliver instruments drawn on the other and in exchange to receive instruments drawn on themselves.

Clearing House arrangement has been established for settlement of payment of different instruments of different Banks of City Corporation/ Municipality area branches. Bangladesh Bank generally acts as organizer of clearing House and Sonali Bank do the job on behalf of Bangladesh Bank, where there is no Bangladesh Bank. Every local schedule bank is the member of the clearing House. The Branches of each clearing house member Bank of the locality is/are the sub-member of the House. The settlement of accounts is done by member bank on behalf of their respective bank’s sub-members.

The net amount payable or receivable as the case may be is settled through an account kept with the controlling bank.

Types of clearing – Outward clearing & Inward Clearing

Types of Return - Outward Return & Inward Return

1.Outward Clearing Process

First Tier-Collecting Bank

Second Tier-Principal/ Main Branch

Third Tier-Clearing House.

Question : 02 :: What is the Procedures of Outward clearing?

Ans:Procedures of Outward clearing

First Tier- Collecting Branch

  • Instrument Received
  • Instrument Checked
  • Instrument Deposited in Second Payee’s account
  • Stamping
  • Special Crossing
  • Clearing Stamp
  • Endorsement
  • Return of counterfoil to the customer
  • Particulars entered in the Outward Clearing Register/ Computer
  • Register Balanced, Vouchers separated from the instruments
  • Voucher passing:Dr.Sundry Assets A/C: Clearing House

Cr.All Pay in slips/ Vouchers

  • Sorting of instruments, prepares sub & main schedule
  • Prepare House page according to main schedules
  • Tallies House page according to Outward clearing Register
  • Instruments sent to Second Tier Branch (Principal/ main Branch)
  • Voucher passed
  • For Return unpaid of Instruments

Dr. Party A/C

Cr.Sundry Assets A/C: Clearing House

*Advice Received from Principal / Main Branch

Dr. Head Office A/C

Cr.Sundry Assets A/C: Clearing House.

Second Tier: Principal /Main Branch

Instrument received by this Branch

Lodgment by the Branch

  • Received House pages with instruments
  • Recorded the amount in Register / Computer from the House Page
  • Prepare Bank –Branch wise main schedule
  • Prepare House Page
  • The instruments with house page & house book sent to Third Tier (Clearing House)

Third Tier:Clearing House (Bangladesh bank/ Sonali Bank Ltd)

  • The Instruments are delivered to the respective Banks

Question : 03 :: What is the Procedures of Outward clearing?

Ans: Procedures of Inward Clearing

First Tier:Clearing House (Bangladesh bank/ Sonali Bank Ltd)

  • Instruments received from other banks in the clearing house
  • The amount & number of instruments received are entered in the house book/ computer from the main schedule of respective banks
  • Instruments delivered, received and the differences are written on a figure slip provided in the clearing house

Second Tier: Principal /Main Branch

  • Instruments with scheduled arranged branch wise
  • The amount of each schedule received entered in the house pages of the respective branches
  • The respective house pages are totaled and checked the amount with total amounts of instrument received from a bank
  • The instruments are sent to respective branches with the slip showing total amount and number of instruments.
  • The instrument sent to the branches concerned for clearance and advice are collected from them for honouredcheques

Third Tier:Paying Branch

  • Particulars of the instruments are compared with the schedule
  • Instruments sent to the respective department for hnouring them
  • For honouredcheques pass the following vouchers:

Dr.Party A/C

Cr.Head office A/c

  • Dishonoueredcheques (if any) with reason memo and credit advice sent to Second Tier (Principal/Main branch).

Question : 04 :: What do you know clearing?

Ans: Clearing and Collections are very important items of bank’s business and without which we cannot think of Bank transactions effectively. All cheques, Payment Order, Demand Drafts and other credit instruments tendered for the credit of customer’s account are delivered by the depositors at the clearing and collection counter. Deposits received by post are to be sent over to the clearing and collection counter. Both Usance and Demand Bills are received at branches for collection or realization.

Clearing:Clearing is a process of collection & payment of instruments (cheques, payment orders, drafts etc.) through inter bank settlement under the leadership of Bangladesh Bank / Sonali Bank (where branch of Bangladesh Bank is not available). Instruments of the clearing area are received by and drawn on the bank (s) (members / sub-members) for credit to/ payment from customers / bank’s accounts collection and payment of clearing instruments are done in the following manner:

Question : 05 :: What do you knowoutward clearing?

Ans: Outward Clearing

Receipt of Instrument by the branches:

The instrument is received duly entered in the voucher (s) pay-in-slip (F-07) duly recorded in the Subsidiary Day Book. Instruments so by the received must be generally and specially crossed.

The instrument is checked for any apparent discrepancy and is compared with the particulars noted in the pay-in-slip and its counter-foil.

In case an Order instrument, proper identification and endorsement is required. However, in case an order instrument is being deposited in second payee’s account or payee’s name on the specially crossed instrument differs slightly from that of the depositor, the instrument may be accepted only from the customers well known to the bank after obtaining a guarantee/an indemnity there against which is to be attached to the pay-in-slip.

Instrument(s) suitably discharged/endorsed/sealed/crossed is/are sent to the In-charge along with the pay-in-slip for checking and signature thereon after affixing the relative stamps on the instrument, pay-in-slip and the counterfoil. Then the instrument and pay-in-slip are detached from the counterfoil and the latter is handed over to the customer.

Clearing Items:

The particulars of the instruments and the vouchers are entered in the outward Clearing Register (B-9)/ Computer. Then get the Clearing Register/Computer entries balanced and the vouchers separated from the instruments lodged and ensure sending of the instrument(s) to the respective Department against acknowledgement in the register.

The instruments are arranged bank-branch wise. The sub-main schedule/computer diskettes are prepared in triplicate, two copies of which are attached with the relative instruments. The grand total of the schedule is taken and agreed with that of the registers/computers total. Then the house page/computer entry is prepared in duplicate and is sent to the Principal Branch /designated Branch with the instruments for clearing purpose.

Social Islami Bank General (SIBG) A/C (L.O/designated Branch) is debited through inter Branch Debit Advice (IBDA) for the total amount of the instruments sent duly recorded in the IBDA issue Register (B-45) and credited to the clearing adjustment A/C. The entry is passed as under:

Dr. SIBG A/C. Principal Branch /Designated Branch

Cr. Clearing Adjustment A/C.

The instruments along with IBDA are sent to Principal Branch /Designated Branch. The entry

relating to Clearing Adjustment A/C is reversed on receipt of clearing return from Principal

Branch /Designated Branch by passing the following entry.

Dr. Clearing Adjustment A/C.

Cr. Concerned Depositor’s A/C.

In case of returns of instruments:

Dr. Clearing Adjustment A/C

Cr. Sundry Deposit A/C

Cr. SIBG A/C. Principal Branch /Designated Branch (for the return and by responding the IDBA)

Receipt of Instrumentby the Principal Branch:

The instrument is received in the similar manner as explained in the earlier Para’s.

The instruments with schedule/computer diskette as received by the branch by the (Member)

from the branches (Sub-members) are re-arranged bank-branch wise.

Lodgment by the Principal Branch:

The amount of the instruments received from the branches are entered in the Outward Clearing

Register (B-9)/Computer and IBD as are entered in IBDA Received Register (B-45).

The Main schedule for each Bank is prepared and total amount from the respective sub-main schedule are entered thereon.

The Clearing House Book (B28)/Computer diskette is prepared in duplicate, and the total is

balanced with that of the Clearing Register/Computer.

The following entries are passed while instruments are sent to Clearing House (Bangladesh Bank)

to give accounting effects:

Dr. SIBG A/C, FAD, Head Office.

Cr. Clearing Adjustment Account (Clients of members Branch)

Cr. Clearing Adjustment Account (Sub-member Branch)

Clearing House at the time of placement of instruments to the house:

The instruments with schedule, Clearing House Book /Computer diskette are to be sent to the Clearing House for realization of proceeds.

Thus the instruments so far piled at Principal Branch/Designated Branch are delivered to the representative of respective banks and simultaneously receive their instruments as delivered by other banks at the Clearing House.

Question : 06 :: What are the steps to inward clearing of Principal ?

Ans: Inward Clearing:

Clearing House at the time of Receipt of Instruments from the House:

  1. The instruments drawn on our bank as received from other branches in Clearing House are entered in the Clearing House Book (B-28)/Computer from the main schedule of the respective bank mentioning the amount and number of the instruments.
  2. The amount of instrument delivered received & the difference is written or a figure slip provided in the Clearing House and the slip is returned.
  3. The instrument with schedules are arranged branch wise in duplicate and a copy of each Schedule is detached.
  4. The amount of each schedule is entreated in the Clearing House Book. (B-28) of the respective branches. The respective house pages are totaled, the total of each is noted on a slip and a grand total is taken out which will agree with the total of clearing house book.

For total instruments received from clearing house the following entries are passed:

Dr. Sundry Depositors/PO/DD payable etc. A/Cs (Principal Branch)

Dr. SIB General A/c of the sub-members

Cr. SIB General A/c, FAD, Head Office.

(Being the amount of total instruments received from clearing house)

  1. The instruments are sent to the respective sub-member branches along with IBDA(s) and with the slip showing total amount and number of instrument sent retaining the instrument meant for the Member Branch.
  2. The instruments are sent to the branches concerned for clearance. The Clearing House Book along with the duplicate schedules and filed.

a)Particulars of the instruments are compared with the Schedule and the slip in along with IBDA and the Schedules are detached.

b) Returned instruments are sent to Principal Branch/Designated Branch along with IBDA within the fixed time frame for onward submission to Bangladesh Bank Return House.

c)The following entries are passed at the time of return inward:

Dr. Sundry Depositors /Clients A/C(Sub-member Branch)

Cr. Clearing Adjustment A/c

(Being the amount of instruments returned dishonor to clearing house)

d) For return outward the entries are as under:

Dr. Clearing Adjustment A/c

Cr. Sundry Depositor A/c(Member)

Cr. SIB General A/c(Principal Branch)

(Being the amount of instruments presented in the House received dishonored from

Clearing House).

Question : 07 :: What are the steps for settlement of Clearing House A/cof Principal ?

Ans:Settlement of Clearing House A/C:

The amount of instrument presented/received/returned (inward & outward) through Clearing

Account shall be settled by observing the following procedures: At the end of the day, the Clearing Adjustment Account will show a nil balance-by transferring the credit balance/debit balance to Bangladesh Bank/Sonali Bank account maintained for the purpose. For favorable/un-favorable House, the following entries are to be passed to make the Clearing Adjustment A/C balance nil.

In case of favorable House:

Dr. Bangladesh Bank/Sonali Bank A/c

Cr. Clearing Adjustment A/c

In case of un- favorable House:

Dr. Clearing Adjustment A/c

Cr. Bangladesh Bank/Sonali Bank A/c

In every case Bangladesh Bank/Sonali Bank Dr./Cr. Advices are to be verified and matched to the entries.

  1. Every receipt/return of clearing instruments (inward & outward) must be recorded in

Clearing Register (B-9)

  1. Every out return must be recorded in Cheque Referred & Return Register (B—50). Dishonor

of instruments must be under the authentication of Manager/ 2nd Officer with due intimation to the drawer.

  1. In case of Return inward the fate of the instruments must be intimated to the depositor with/without the instruments as warrants

Transfer Delivery:

Receipt of Instrument by the branches:

The instruments are received from the customers/ departments & similar procedure is adopted as explained earlier in previous sections.

The collecting branch prepares a schedule of all the cheques drawn on the branches at Dhaka City area and debit SIBG Account Principal Branch for the entire amount. Accordingly they prepare a debit advice (IBDA) to send the same to Principal Branch for collection of the instrument under Transfer Delivery System.

The instruments with schedules, advice received from the branches are
arranged branch-wise and a main schedule is prepared to enter the same with total amount in the Outward Transfer Delivery Register (B-9).

The amounts of advice received from the branches are also entered on the opposite page

of the above noted register and the register is balanced.

Principal Branch, in time, debits the Transfer Delivery Adjustment Account to respond the related IBDA(s) of the respective branches. Principal Branch at the same time again debit the drawee branches by IBDA after sorting all the instrument branch-wise. Then send the instruments along with IBDA to respective branches.

In case of return unpaid of any instrument from any drawee branch, they send IBDA and instruments to Principal Branch again for settlement of the transfer delivery at Principal Branch.

The Principal Branch will further debit the Originating branch and Credit the Transfer Delivery Adjustment Account for final settlement at Principal Branch. At Present Office leads the function of Transfer Delivery activities with the branches of Dhaka City.

Every receipt/return of Transfer Delivery Instruments (inward & out ward) must be

recorded in Transfer Delivery Register (B-9)

Question : 08 :: Whatdo you know about Outward Bill for Collection (OBC)?

Ans:Outward Bill for Collection (OBC):

8.1Collection of Outstation Cheques:

The instruments received enclosing Pay-in-slip are duly checked and compared with the particulars noted in the Pay-in-slip and its counterfoil shall be entered in the Subsidiary Day Book .

8.2The instrument and the pay-in-slip are detached from the counterfoil and the later is handed over to the customer duly stamped and signed.

8.3 Outward Bills for

The details of the instruments are entered in the Collection Register (B-31) and a collection number is allotted in serial order which is also noted on the instrument and the pay-in-slip duly initialed by the authorised officer. The instrument is sent to the collecting branch under registered post/enlisted courier service through a forwarding schedule (F-13) with necessary instructions for collection and remittance of the proceeds the pay-in-slip is to be kept/preserved in the OBC outstanding file with care to guard against fraud forgery altering the Particulars of the pay-in-slip or by keeping a fake pay-in-slip in OBC file removing the original / genuine one.

8.4 The instrument drawn on other banks are sent to the nearest main branch of the bank of the locality and the instruments drawn on our branch easement direct to the respective branch.

8.5At the time of sending the instrument for collection, the following contra entries are passed:

Dr.Outward Bills Lodged A/c. (OBL)

Cr.Outward Bills for Collection A/c. (OBC)

8.6On receipt of the collection proceeds the following vouchers are to be passed:

(a) Dr.Outward Bills for Collection A/c. (OBC)

Cr.Outward Bills Lodged A/c. (OBL)

(Being entry passed on……….against OBC No………now reverse on collection / return).

Dr. SIBGen A/c (Collection Bank)

Cr. Clients / Depositors A/c

(Being the OBC No……..sent for collection now realized)

For realizing the charges/commission:

Dr. Client’s A/c

Cr. Income A/c (Commission)

Cr. Income A/c (postal charges)

Debit and Credit advices (F-21 & 20) are to be sent to the clients for information and necessary action.

For realizing the charges/commission

Dr. Client’s A/c

Cr. Income A/c (Commission)

Cr. Income A/c (postal charges)

(Being the amount to commission and postal charges incurred now realized)

The outward Bills lodged are to be balanced monthly with the figure so the outstanding OBC vouchers on the particular date.

Question : 09 ::How to realize Realisation of proceeds through advice?

Ans:Realisation of proceeds through advice:

On receipt of the related realisation advice, the following entries are passed.

(a)Dr.Outward Bills for Collection (OBC) A/c.

Cr.Outward Bills Lodged (OBL) A/c.

(b)Dr. SIBG A/c. (Branch Concerned) (Br. Advice is treated as debit voucher)

Cr.Party’s Account

Cr.Income Account (Postage/Telegram charges recovered)

Cr.Income Account (Commission)

Cr.Income Account, (others, if any)

The date of payment is marked in the Register (B-31) and office copy of the schedule and pay-in-slip are to be stamped and numbered serially as per register. The voucher, pay-in-slip, schedule and the realisation advice along with the register are sent to the Officer-in-charge for checking and signature.

The vouchers are released and the schedule is filed in the “OBC Paid File” and the realisation advice is to be sent to Depositor/Client.