The CLG Full Form in Banking is Clearing. We often come Across This Term Called CLG in Banking. CLG is Associated with the Payment Made Using the Cheque. If You see CLG in any of Your Transactions, You can Assume That It is a clearing transaction.
For Example, Supposed You have Received a Cheque from the payor and You have Deposited that Cheque in Your Bank Account. Once Deposit, the Cheque will be Sent for “Clearing” to the cheque issuer bank.
Now the Issuer Bank will Verify the Cheque & Process the Money which will Be credited to Your Bank Account. The Time in Between Depositing the Cheque to Your Bank and Receiving the Money on Your Account is Acknowledged as Clearing. This Was all about the CLG Full Form Banking, Let us Know More about Cheque Clearing Process.
Cheque Clearing is a Process of moving cash From Drawer Banks to Payee’s Bank. In this Process of Clearing Cheque, the Amount Gets Debited From the Drawer Bank Account and equivalent Money Gets Credited to Payee Bank Account. At the Time of Clearing Cheque, if the Drawer Doesn’t Have Enough Funds in His/ Her Account, The Cheque is Returned as NSF (Non-Sufficient Funds)
History of Cheque ( Early 1600 )
The utilization of Cheque came to use in the Early 1600 in England. The Payee to whom the cheque was drawn Has to Visit the Drawers Bank to Receive The Funds. Before Making the Payment, The Drawers Bank use to verify the Authenticity of the Cheque by inspecting the Drawers Signature, Date, etc.
In 1810, The Suffolk Bank in the United States Started the First Cheque Clearing House in Boston. But Rather than using the Slow Cheque Clearing System Used in London, They Found other Solutions to Speed up the Procedure.
As The Volume of Cheque Grows over the Years, Cheque truncation Was Introduced in Various Countries. Cheque truncation is an Electronic Form of Cheque Clearance that Involves the digitalization of a physical paper cheque into an electronic form.
The Cheque Truncation Reduces The Physical Movement of Cheque to Make More Efficient System.
Cheque truncation in India Was First Introduced in 2008 and later extended to many other cities in the Country. The System Efficiently Handles The Cheque Clearance in Country by Reducing the Time & Physical Movement.
We Hope this Article Clears all Your Queries Related to the CLG Full form in Banking. If You have any Queries Related to CLG or Cheque Truncation, Please Feel free to share with us in the Comments Below.
Very often, you may have noticed in your passbook or bank statements the word ‘CLG‘ associated with money deposited to your bank account via cheques. Suppose someone issues you a cheque as a payment of something the person purchased from you. You go to your bank and deposit the cheques, which may or may not be of the same bank, into your account. Your bank, in turn, requests money from the other bank, usually via an intermediary, and thus funds are credited to your account, appearing as CLG in your account statements.
CLG in banking terms means clearing. In the above example, the person who gave you the check made a commitment for a transaction, and the banks settled the transaction, this complete process is known as clearing. It involves turning the promise of money, usually in the form of cheques, or electronic payment requests, into the actual transfer of funds from one bank account to another.
Money transaction through cheques has been present since the 1600s in England. The traditional system involved the actual movement of cheques by the bank clerks, after the bank hours, who maintained the records of the money that was owed to their banks and the amount their banks owed to other banks. Several different variations and improvisations of this system existed until the mid-nineteenth century.
Special Clearing Houses started operating in America, where bank clerks used to sit around oval tables, and on the manager’s signal, completed their assigned transactions and at the end would have the net amount of funds owed to their banks. Clerks were fined if they made errors. Over decades, improvements were made in the process all banks now had their clearinghouses or the branches of Central Bank or other public banks acted as one.
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