The Paper-Based (Checks) Clearinghouse

The clearinghouse operates in accordance with an agreement between its members -- the banking corporations in Israel, the Postal Bank, and the Bank of Israel. Some of the clearing house's members operate directly in the clearing house, while others are represented by other banks. Banks operating in the Palestinian Authority are also members of the clearing house, and they are represented by three banking corporations in Israel.1

The Paper-Based (Checks) Clearinghouse is managed by the Clearinghouse Committee, which consists of 14 members -- half of them from the Bank of Israel and half of them from the banking system. The committee's principal function is to regulate the transfer of drafts and settlements between the banks.

The Paper-Based (Checks) Clearinghouse operates in accordance with "the Clearinghouse Rules", which are updated from time to time in accordance with the decisions of the Clearinghouse Committee. The Clearinghouse Committee convenes periodically in order to discuss current requirements and to update the clearinghouse principles as necessary.

The Paper-Based Clearinghouse (BCH) settles instruments that are sent on paper. The instruments presented by the banks at the BCH are mainly checks, which are now presented  -- and held by electronic means only. Nonmagnetic credits and debits -- manual instruments -- are also presented.

Instruments are settled at the BCH on the evening of the business day on which they are deposited at the banks. The banks are entitled not to honor instruments, and in such cases these are usually returned on the business day following their deposit. Returns of instruments are recorded at the time of return according to the current value on the date of deposit. The settlement between the banks is recorded on the following business day in the Zahav system.