How are cheques cleared Banks
Answers
Cheque clearing (or check clearing in American English) is the process of moving a cheque from the bank in which it was deposited to the bank on which it was drawn, and the movement of the money in the opposite direction. This process is called the clearing cycleand normally results in a credit to the account at the bank of deposit, and an equivalent debit to the account at the bank on which it was drawn.[1]
The process would take a number of days as cheques would have to be physically taken back to the issuing bank until the development of cheque truncation in the 1990s. In many countries this would be via a central clearing house operated by the banks to make the process more efficient. If there was not enough funds in the account when the cheque arrived at the issuing bank, the cheque would be returned as a dishonoured cheque marked as non-sufficient funds.