Analysis of Clearing Process Infrastructure in HDFC and SBI: A Comparative Study

Analysis of Clearing Process Infrastructure in HDFC and SBI: A Comparative Study

Amita Nigam (Sri Sharda Institute of Management and Technology, India)
DOI: 10.4018/978-1-4666-5154-8.ch026
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Abstract

Clearing is the process of realization of proceeds of cheques drawn on other banks through intermediary RBI/SBI or any other bank that acts as a Clearing House. A clearing house established in any location helps in faster and efficient collection of the cheques. A few private banks have been authorized to run the clearing houses at few locations. HDFC Bank Ltd. is one such privileged private sector bank. The chapter analyzes the process set for clearing services in the HDFC and SBI. The study employs primary data collected through observation by spending time and watching people in the organization, though it has been supplemented by the secondary data as well. The results indicate the various types of clearing process present in HDFC Bank and SBI for providing better and fast services to their customers and set higher standards for performance. The bank is committed to increased use of technology to provide quick collection services to its customers. The banking sector, whether it is private or public sector banks, has immensely benefited from the implementation of superior technology during the recent past, which has given new shape to the nature of the services provided to customers. This chapter also compares the clearing-related banking services provided by HDFC and SBI on the basis of primary data collected through the questionnaire to provide the different aspects and drawbacks of services of the public sector bank (SBI) and private sector bank (HDFC).
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Clearing

According to Jha and Sarangi (2011) clearing is the process of realization of proceeds of cheques drawn on other banks through intermediary (RBI/SBI or any other bank which act as a Clearing House).Clearing house established in any location helps in faster and efficient collection of the cheques. Wherever Reserve Bank of India has its office (and a banking department), the clearing house is managed by it. In the absence of an office of the Reserve Bank, the clearing house is managed by the State Bank of India, its associate banks and in a few cases by public sector banks. Also a few private banks have been authorized to run the clearing houses at few locations. HDFC Bank Ltd. is one of such privileged private sector Bank.

Types of Clearing

Outward Clearing: It refers to instruments deposited by the customers of HDFC Bank which are drawn on other banks that need to be presented in clearing for collection and the funds are credited to clients account by HDFC Bank.

Inward Clearing: It refers to the cheques issued by the HDFC Bank customers to their clients which are deposited by them with their own banks for collection and are presented to HDFC Bank through Clearing House.

For Instance: Mr. A has an account with HDFC Bank in Kamla Nagar in Delhi. He receives a crossed cheque from Mr. B for Rs. 50000 whose account with SBI, Moti Nagar in Delhi. Mr. A deposits this cheque with HDFC Bank which will present the same to SBI for collection through Clearing House, Delhi. On collection of proceeds from State Bank of India through Clearing House, HDFC Bank will credit the amount to Mr. A’s account with him.

Here the cheque which is presented in clearing by HDFC Bank is outward clearing for HDFC Bank and the same cheque is inward clearing for SBI.

Now if Mr. A issues cheque from his account with HDFC Bank and gives to Mr. C and Mr. C deposits this cheque with PNB (Because Mr. C maintains account with PNB) for collection through clearing house, this cheque is outward clearing cheque for PNB and is inward clearing for HDFC Bank.

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