Thursday, March 19, 2009

Clearing House

Dr. D. Cock Says, “Clearing house is that department of central bank where the representative of member banks and financial institutions gather to clear their accounts.”

Clearing house is a place at the central bank or any other leading bank of the locality where the representatives of the member banks come at fixed time and exchange cheques or drafts drawn on each other and settle the resulting balances through entries in the books of the bank acting as clearing house.

The central bank manages and supervises the clearing house to facilitate the clearing of cheques between banks. Every bank usually receives number of cheques drawn on other banks from his customers as deposits.

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