When you review your bank passbook and come across the term ‘By CLG’, you may wonder what it means and why it’s there. Understanding banking terminologies can sometimes be a bit tricky, but knowing the key terms helps you stay informed about your finances.
In this article, we’ll explain the meaning of ‘By CLG’, its full form, and how it relates to the clearing process in banking. We’ll also break it down in a way that’s easy to understand for users of any age group.
What Does ‘By CLG’ Mean in Passbook Entries?
‘By CLG’ in a passbook refers to a transaction made by Clearing. Specifically, CLG stands for “Clearing” or “Cheque Clearing” in the context of a bank account entry.
When you see ‘By CLG’, it indicates that the amount has been credited to your account through the cheque clearing process. This can happen in various scenarios, such as when someone deposits a cheque into your account or when you deposit your cheque at a bank branch.
The Full Form of CLG
The term CLG stands for Cheque Legally Guaranteed or Cheque Clearing. This term is commonly used by Indian banks, and you may often encounter it in passbooks or account statements when a cheque has been processed through the clearing system.
The cheque clearing process is a standard method for transferring funds between different banks. When a cheque is deposited, it doesn’t immediately result in money being available in the recipient’s account. The bank first verifies the details, ensuring the cheque is genuine and that the funds are available in the payer’s account.
How the Clearing Process Works in Banking
The clearing process in banking is crucial for ensuring that payments made via cheques or drafts are settled between different financial institutions. Here’s a simple breakdown of how the process works:
1. Cheque Deposit:
When you deposit a cheque at your bank, your bank (the drawee bank) checks if everything is in order. This includes verifying the authenticity of the cheque and confirming that the payer’s account has sufficient funds.
2. Cheque Collection:
Once your bank confirms the cheque, it sends the cheque to the centralized clearinghouse. This clearinghouse is a system where various banks submit the cheques they have received for clearing. In India, this process is often handled by the Reserve Bank of India (RBI) through the National Payments Corporation of India (NPCI).
3. Clearing Cycle:
The cheque is processed and cleared during a specific clearing cycle. It usually takes around 1-3 business days for the cheque to be cleared, depending on the type of cheque and the location of the bank.
4. Settlement:
Once the cheque is cleared and verified, the funds are transferred from the payer’s account to the payee’s account. This is when you’ll see the ‘By CLG’ entry in your passbook, reflecting the credit to your account.
Why Is ‘By CLG’ Important to Understand?
Knowing the meaning of ‘By CLG’ and the clearing process can help you better manage your finances. Here’s why:
1. Tracking Payments:
If you receive payments via cheques, seeing ‘By CLG’ in your passbook helps you track when the payment has been credited. This is especially important if you’re waiting for a payment to clear from a business or individual.
2. Understanding Delays:
Sometimes, there can be delays in the clearing process. If you’re expecting funds and see the ‘By CLG’ entry without immediate credit, it could mean that the cheque is still in the process of being cleared. Understanding this can prevent confusion and help you avoid unnecessary follow-ups.
3. Verifying Your Bank Statements:
‘By CLG’ entries help verify the authenticity of your bank transactions. This is especially useful when you need to reconcile your bank passbook or if you’re looking for discrepancies in your account.
Types of Transactions Processed via CLG
While ‘By CLG’ generally refers to cheques, there are other transactions that might also go through the clearing process, such as:
- Demand Drafts (DD): Like cheques, DDs can also be cleared through the banking system. If someone deposits a demand draft in your account, it will be shown as ‘By CLG’ once processed.
- Electronic Clearing Services (ECS): In some cases, ECS transactions—which allow for bulk payments or payments to be deducted automatically—can also appear as ‘By CLG’ entries in your passbook.
- Outstation Cheques: When you deposit a cheque that is drawn on a bank in another city, it is usually processed through a clearing house system, and the entry will show as ‘By CLG’.
How to Track Clearing Transactions in Your Account
If you’re expecting a cheque to clear or want to know the status of your cheque, it’s a good idea to check your bank passbook or online banking portal regularly. Here’s how you can keep track:
- Passbook Updates: Look for entries marked ‘By CLG’ to see which transactions are still in the clearing process.
- Online Banking: Use your bank’s online portal or mobile app to check if your cheque or draft has been cleared. Many banks allow you to check the status of your clearing transactions directly online.
- Follow-Up with the Bank: If you’re concerned about a delay or want more information about the clearing status, it’s always a good idea to call your bank or visit a branch.
Conclusion
Understanding the term ‘By CLG’ in your passbook is an important part of managing your finances. It indicates that a cheque or demand draft has been processed through the clearing system, which means the funds have been transferred to your account after verification. Whether you’re a frequent cheque depositor or just need to know how the process works, now you have a clearer understanding of what happens behind the scenes when you see ‘By CLG’ in your passbook.
