We are currently looking into a way to release holds once the check clears. For example if the check has been placed on hold for 5 days, I think it's a disservice to hold the check for 5 days if the check cleared in 3 days. How will we know if the check has actually cleared, especially since you don't get the cooperation of some financial institutions when you call to verify funds. Any advice as to how to implement this procedure? The previous bank I worked at did this, they notified the customer as soon as the check cleared; however I don't know what kind of system they used.

If you are are any larger than a very small bank, you are suggesting something that is impractical. Besides, are you going to hang your hat on some clerk telling you verbally - that "yeah - that checked cleared"?

In the past, I've worked for FI's that would have DP staff call PB to verify if checks cleared.

I feel it was highly impractical and costly. Although unfair to customers, it's just simply not feasible.


My 2 $.01.
-- Wendy Smith
IA/CO

So you call the bank to ask if the check has cleared and they say "yes". However, your call generates some interest on their end. They review the customer's account at their bank and decide that perhaps they should be placing some holds as well, so they decide to return the check. You just released your hold. Guess who could be left holding worthless paper?

This is a real scenario. Fortunately, I was able to convince the account officer not to release the hold so we were still protected when the $17k+ check came rolling back in the next day. One of the large banks in town lost over $300k on this customer.

Most financial institutions, including the one I work for, will not disclose any information regarding whether or not a item has paid. Our procedures still require that a call be placed to the paying bank just in case we get a response. If, because of the telephone call we find that the check has/will paid before the case by case hold expires, the hold is released early. If no information is given, or we find that the check will not be paid before the hold expires, the hold is extended to 7 or ll business days. We continue to call on the extended hold, and would release the hold early if appropriate. Otherwise, the extended hold stays in place until the 7th or 11th business day, at which time the entry is reversed.