You may have noticed in your passbook or bank statements the word âCLGâ associated with money deposited to your bank account via cheques. Suppose someone issues you a cheque as a payment of something the person purchased from you. You go to your bank and deposit the cheques, which may or may not be of the same bank, into your account. Your bank, in turn, requests money from the other bank, usually via an intermediary, and thus funds are credited to your account, appearing as CLG in your account statements.
CLG in banking terms means clearing. In the above example, the person who gave you the check made a commitment for a transaction, and the banks settled the transaction, this complete process is known as clearing. It involves turning the promise of money, usually in the form of cheques, or electronic payment requests, into the actual transfer of funds from one bank account to another.
Thus, the strange term CLG, which you have seen in your bank statements, actually stands for clearing and has a long and fascinating history, to begin with. The traditional system involved physical movement of the cheques, and calculations done by the bank clerks. This eventually faded out and is now replaced with the electronic movement of cheques, thus ensuring security, reliability, and overall better customer experience.
