If you've observed your passbook entries after depositing a check, you might see an entry labeled 'By CLG'. So, what does CLG mean? Well, CLG stands for Clearing. This is the process of sending the deposited check to the issuing bank through the Clearing House to collect funds and credit them to your account.

The Clearing House is pivotal in the check-clearing process. Upon depositing a check, it must be collected from various banks and then delivered to the issuing banks. The Clearing House acts as a central point for receiving these checks, guaranteeing they reach the correct banks for fund collection.

In India, there are roughly 860 clearing houses. The State Bank of India (SBI) and its associates manage 840, the Reserve Bank of India (RBI) controls 14, and six are handled by Nationalised Banks. It's essential for banks to be members of a clearinghouse to clear checks through the system.

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So, how does the check clearance process work? Once you deposit a check, it progresses through multiple steps to ensure funds are credited to your account:

1. Clearing Structure: Introduced to simplify check movement between presenting and drawee branches. A service branch at each center represents the member bank in the clearinghouse, collecting checks for presentation.
2. Clearing Process: Checks are sorted at the clearinghouse and presented to drawee branches via the service branch. Drawee branches verify the checks' authenticity. Unaccepted checks are returned through the Returns Clearing process.
3. Funds Settlement: Settlement occurs at various levels. The presenting bank requests funds from the drawee bank, with similar exchanges among other member banks. The net settlement is determined at the clearinghouse, leading to a debit or credit. The interbank settlement amount is finalized.
4. Clearing Returns: Finalizing unpaid checks occurs in this process. The clearinghouse compiles clearing returns, debiting the presenting bank and crediting the drawee bank. If a check is returned, the previously credited amount to the customer's account is reversed.
5. Inter-branch Clearing: Checks from the same bank's different branches bypass the clearinghouse. The service branch acts as the settlement branch, handling inter-branch settlements by debiting and crediting accounts internally.

It's crucial to acknowledge that the clearing process involves a time lag. There is a delay as the check moves, and it may take 2 to 3 days for the funds to be credited to your account.

In conclusion, understanding the CLG Full Form and the check clearing process enables you to comprehend the entries in your passbook. The term 'By CLG' simply means the check sent for clearance has been approved for payment.

Notably, with the Cheque Truncation System, which is an electronic mode, the check clearing process has become faster and more streamlined.

Keywords: NEFT, RTGS, IMPS, UPI, NRIs