These days, we do not hear too much of outstation cheques. In fact, they are hardly in vogue in the major cities, as individuals tend to remit through NEFT, Bank drafts and RTGS.
How does an outstation cheque work?
It is very important to first understand, how an outstation cheque works. Say, a person resides in Kolkata and presents the cheque to his or her branch of a bank branch in Mumbai.
The bank that he presents to is his own branch, which is called the presenting bank branch. This branch then sends it to the collecting branch for payment.
The branch then makes the usual clearance and the fund are collected. It is extremely time consuming and for some reason if the cheque bounces, it is a complete waste of time.
How long does the clearance take for the outstation cheque?
It takes a long time to get the outstation cheque to clear. In fact, to be precise it takes around 3-weeks for such types of cheques to clear. So, if you are residing in another state, and have to receive funds from another state, it is advised not to take such cheques, unless they are payable at par across the cities.
Core banking networked branches
However, branches that are networked through the core banking services can ensure that collection of outstation cheques is not a problem. In the CBS environment, cheques can be paid at any location obviating the need for their physical movement to the Drawee branch.
Cheques drawn on outstation CBS branches of a Drawee bank can be processed in the LocalClearing under the Speed Clearing arrangement if the Drawee bank has a branch presence at the local centre.