What is cheque clearing

Cheque clearing is the process of moving funds from the drawer's bank account to the payee's bank account to settle a cheque payment. In India, this is primarily managed through the Cheque Truncation System (CTS), where electronic images of cheques are used for faster processing instead of physical movement. The cycle involves:

• The payee deposits the cheque at their bank.
• The bank sends an electronic image to the clearing house.
• The drawee bank verifies funds and clears the payment.
• The amount is credited to the payee’s account, typically within one to three working days.