2. Introduction
Business Scenario
Finacle CBS Process Overview
Key Terminologies
Step by Step Process
Demonstration
Summary

3. Lesson Objective Duration Intended Audience
To understand the process and concept of outward clearing in Finacle CBS
Duration
1 Hour
Customer Service
Intended Audience

4. Business Scenario
A Customer of your PO deposits a cheque for collection, drawn on another bank in your locality. You can perform the collection through local clearing. How will you lodge the cheque in local clearing and send it for collection in Finacle CBS?
Let us see the generic process in detail for Outward Clearing in Finacle CBS.

5. PROCESS OF OUTWARD CLEARING AT SUB-OFFICE (SO)
The following functions can be performed for capturing the details of the instrument from the menu option “HOMSO”
A-Add
M-Modify
I-Inquire
V-Verify
 Approach for outward clearing at Sub Office (SO) in Finacle CBS
Outward Memo for Sub-Office “HOMSO”
The report to be generated by SO by invoking menu option “CHQLR” for generation of report for the cheques captured in the system and will tally the same with the instruments before sending to HO.
Report of HOMSO
“CHQLR”

6. PROCESS OF OUTWARD CLEARING AT HEAD OFFICE (HO)
Approach for outward clearing at Head Office (HO) in Finacle CBS
The following functions could be performed:
Opening an Outward Clearing Zone
Suspending a Zone
Revoking suspension
Inquiring a zone
Deleting a zone
Releasing zone to Shadow Balance
Regularizing Shadow Balance
Maintain a Clearing Zone (HMCLZOH)
The following functions could be performed:
Add
Modify
Delete
Verify
Inquire
Instruments are lodged only for the opened zones
The user has the following options for entry of instruments:
Multiple instruments for a single credit
Single instrument for a single credit
Single instrument for multiple credit
Clearing Zone Transaction (HOCTM)

7. The approach for Outward Clearing in Finacle at SO:
The following are the functions of HOMSO menu options:
A-ADD
M-Modify
X- Cancel
V-Verify
Lodging of instruments (HOMSO)
The report to be generated by SO by invoking menu option “CHQLR” for generation of report for the cheques captured in the system and will tally the same with the instruments before sending to HO.
Generation of the report (CHQLR)

8. Open an Outward Clearing Zone Suspend a Zone Revoke suspension
Finacle Process Overview
The approach for Outward Clearing in Finacle at HO:
Uploading the instrument at HO by invoking the menu option “HCLUPLD”
The following are the functions of HMCLZOH menu options:
Open an Outward Clearing Zone
Suspend a Zone
Revoke suspension
Inquire a zone
Release zone to Shadow Balance
Regularize Shadow Balance
Maintain a Clearing Zone (HMCLZOH)
Instruments are lodged only for the opened zones
HOCTM (verification set-wise instruments)
HOCTV (Bulk verification)
The user has the following options for entry of instruments
Multiple instruments for a single credit
Single instrument for a single credit
Single instrument for multiple credit
Clearing Zone Transaction (HOCTM)

9. Key Terminologies TERMS DESCRIPTION 1 Clearing
The members (Post offices, Banks or FIs) of a Local Clearing House exchange the instruments (cheques, Demand Drafts and so on) drawn on them and issued by them for debiting and crediting the proceeds respectively, through a net settlement process. 2
Clearing House
A place where representatives of all FIs meet at specified time, to exchange instruments and workout the net balances against each other. 3
Clearing Zone
A Zone in Finacle identifies the time and instrument-value-based segregation. For example, there could be separate zone for High Value Instruments, MICR instruments and non-MICR instruments. Instruments are lodged and sent to clearing house depending on the segregation and on the time to the clearing house. 4
Drawee Post Office/FI/Bank
The Post Office which receives the instrument drawn on it. 5
Collecting Post Office/FI/Bank
The Post Office that presents the cheque and collects the proceeds from the drawee Post Office, and credits it to the beneficiary’s account. 6
Beneficiary
The person to whom the proceeds of the instrument need to be credited. 7
Outward clearing
Any instrument that is sent for collection and the proceeds are realized. 8
Inward Clearing
Instruments drawn on the accounts of customers and received for collection from other institutions on behalf of their customers. 9
Outward reject
Any instrument that is sent for collection and is returned unpaid.

10. Key Terminologies (Contd…)
TERMS
DESCRIPTION 10
Inward reject
Any instrument which is received for clearing and is returned to the presenter Bank/Branch on account of non-payment for any reason. 11
Instrument
An instrument is referred to any Negotiable instruments like Cheque, Demand Draft, Interest Warrants, Dividend Warrants and the likes. 12
Sort code
Sort code is a 9 digit clearing MICR code where the first 3 digits is a city code, next 3 digits is a bank code and the last 3 digits is the branch code. 13
Float balance
It is a sum of all the instruments which are lodged in outward clearing zones for the day. 14
Shadow balance/ un- cleared balance
During outward clearing, the Post office releases the credit to the customer’s account. However, that amount is unavailable for withdrawal because the instrument presented by the customer is subject to realization at the drawee branch. 15
Release to Shadow Balance
A process of crediting the proceeds of funds in clearing to the customer’s accounts, but will not be made available for withdrawal. 16
Regularization
The amount that has been marked as a shadow balance is made available to the customer. 17
Set
A bunch of pay-in-slip/ credit vouchers and instruments (Cheque, Demand Draft, Banker’s Cheque and the like) where the credit leg (Amount as per pay- in-slip/credit vouchers) and the debit leg (Amount as per cheque, Demand draft, Bankers cheque) is balanced.

11. Given below is the step by step process to perform the outward clearing in Finacle at Sub Office (SO)
Invoke the menu option HOCSO for lodging of the instruments at Sub Office level.
The report to be generated by SO by invoking menu option “CHQLR” for generation of report for the cheques captured in the system and will tally the same with the instruments before sending to HO

12. Step by Step Process
Given below is the step by step process to perform the outward clearing in Finacle at Head Office (HO)
Invoke the menu option HMCLZOH (Maintain Outward Clearing Zone) to open a zone.
HO will upload the instrument by invoking the menu option CLUPLD
Invoke the menu option HOCTM (Outward Clearing Transaction Maintenance Online) to lodge and Verify (Set-wise instrument) and HOCTV (Verification of bulk instruments) an instrument.
Invoke the menu option HMCLZOH to suspend the zone.
Invoke the menu option HMCLZOH to release the lodgement to the shadow balance.
Invoke the menu option HMCLZOH to regularize the shadow balance to regularize the zone.

13. CHEQUE TRUNCATION SYSTEM (CTM)
Process of Cheque Truncation System
HO will scan the cheques in the CTS system
The Service HO will generate a consolidated file of all the cheques that have been captured in the CTS system by the HO’s reporting to it.
The service HO would open an outward clearing zone and upload the file generated from CTS to Finacle
CTS would also generate a file to be sent to Clearing House.
The non-banking cheques should be captured in the office account meant for non-banking cheques in the CTS system
The Service branch will then release the zone 
Process of Cheque Reject in CTS
CTS would receive the rejected cheque details from Clearing House
CTS will generate a file in Finacle in a specific format with the rejected cheque details
This file would then be uploaded in the Finacle system by Service branch user
The Finacle user would mark the cheques as rejected
The clearing zone would then be regularized
The non-banking cheques fund would lie in the office account for further action

14. Demonstration

15. Summary
Congratulations!! You have successfully completed the lesson on Outward Clearing. Following is the summary of important points discussed in this lesson:
Process of Outward clearing at Sub-Office (SO)
Invoke the menu option “HOMSO” for lodging and for verification of the instruments
Invoke “CHQLR” for generating the report for the instruments lodged and tally the instrument with the system, send the cheque to HO
Process of Outward Clearing at Head Office(HO)
Opening of a zone by invoking menu option “HMCLZOH”
Uploading the file generated by SO through menu option “HCLUPLD”.
Lodging can also be done of the instruments in the zone using the menu option HOCTM at HO
Invoke menu option HOCTM(Set-wise verification)/HOCTV(Bulk verification)
Suspend the zone by invoking HMCLZOH so that no more instruments could be lodged in that zone.
Release the instruments to the shadow balance by invoking HMCLZOH.
Rejection of the cheques have to be marked.
After realisation of outward clearing, regularize the shadow balance by invoking HMCLZOH. The status of the zone will be CLOSED.
The process of Cheque Truncation System (CTM)
Finacle CBS also facilitates marking a specific instrument, bank/branch pending from the existing clearing lot processing for any valid reasons. This can be done by invoking the menu option HMARKPEN
This pending status of instrument, bank/branch can be revoked later by invoking the menu HREVPEND

17. Now let us do a hands on exercise on this topic
Now let us do a hands on exercise on this topic. Please refer to the Hands on exercise section of the job aid