The clearing of cheques

• There are three ways and circumstances in which a cheque may be cleared.

If the payee and drawer use the same bank and branch

1. The payee deposits the cheque into his/her account.
2. The payee is credited and,
3. The drawer is debited.

If the payee and drawer use the same bank but different branches

At the payee’s branch

1. The payee deposits the cheque into their bank account.
2. The payee’s account is credited with the cheque amount.

At the bank’s headquarters

1. The cheques are sorted according to their branches
2. They are then sent to their corresponding bank branches.

At the drawer’s branch

1. The drawer’s account is debited.

If the payee and drawer use different bank accounts

At the payee’s bank and branch

1. The payee deposits the cheque into their account.
2. The payee is credited with the cheque amount.
3. The cheque is sent to the Bank Headquarters.

At the payee’s bank Headquarters

1. The cheques are sorted according to their respective banks.
2. They are then send to a clearing house.

At the Clearing House

1. All banks have an account with the clearing house.
2. Representatives from the various bank settle their banks’ obligations and physically exchange the cheques.
3. They then take them to their banks’ headquarters.

Drawer’s Bank’s Headquarters

1. The cheques are sorted according to their bank branches.
2. They are then send out to their respective bank branches.

At the drawer’s bank branch.

1. The drawer’s bank account is debited by the cheque amount.

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