Cleared For Fate

Refers to the date when the payer's bank confirms that the funds for a transfer are available and the instructions in a cheque have been processed.
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Definition

Cleared for Fate denotes the date on which the payer’s bank has verified that funds are available for a transfer according to the instructions given in a cheque. This process ensures that the money is now committed to the payee and typically takes up to four working days after the cheque has cleared for value. Once a cheque has cleared for fate, the funds transferred cannot typically be reclaimed unless there is evidence of deliberate fraud.

Examples

  1. Cheque Deposit Process:

    • Example: John deposits a cheque from his employer on Monday. By Friday, the cheque is cleared for fate, meaning the funds are now available in John’s account, and his employer’s bank has confirmed the availability of the funds.

  2. Non-Fraudulent Transactions:

    • Example: Maria receives a cheque as payment for freelance work. The cheque is deemed cleared for fate four days later, ensuring that she has the funds in her account and that they cannot be reversed unless fraud is detected.

Frequently Asked Questions

Q1: What is the difference between “cleared for value” and “cleared for fate”?
A1: “Cleared for value” refers to the initial phase when the cheque amount is credited to the payee’s account, although the payer’s bank has not fully completed the checks. “Cleared for fate” occurs once the cheque processing is fully complete and cannot be reversed unless there is fraud evidence.

Q2: How long does it take for a cheque to be cleared for fate?
A2: It typically takes up to four working days from the time a cheque has cleared for value for it to be cleared for fate.

Q3: Can funds cleared for fate be reclaimed?
A3: Generally, funds cleared for fate cannot be reclaimed unless there is compelling evidence of deliberate fraud.

  • Clearing Cycle: The series of procedural steps a cheque goes through from the point it is deposited to when the funds are made available for withdrawal.

Online References

Suggested Books for Further Studies

  • “Modern Banking” by Shelagh Heffernan
  • “Banking and Financial Institutions: A Guide for Directors, Investors, and Borrowers” by Benton E. Gup
  • “The Principles of Banking” by Moorad Choudhry

Accounting Basics: “Cleared For Fate” Fundamentals Quiz

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