The Banks' Clearing House

The Banks' Clearing House is comprised of the Paper-Based Clearing House (BCH) (checks) and the Automated Clearing House (Masav).

The clearing house operates in accordance with an agreement between its members-the banking corporations in Israel, the Postal Bank and the Bank of Israel. Part of the clearing house members operate directly in the clearing house, and part of them 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 Bank Clearing House is managed by the Clearing House Committee, which enumerates 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 Bank Clearing House operates in accordance with "the clearing house rules", which are updated from time to time in accordance with the decisions of the Clearing House Committee. The Clearing House Committee convenes periodically in order to discuss the clearing house's current requirements and to update the clearing house principles as necessary.

The Paper-Based Clearing House (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. Also presented are non-magnetic credits and debits - manual instruments.

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.

Masav is an electronic system that settles inter-bank movements (debit and credit instructions) that are not based on paper documents or cash, such as account debiting authorizations ("standing orders"), salary payments and tax rebates, which are transferred to it by the banks and by other institutions that are authorized to send direct instructions to the Automatic Clearing House.

Debit and credit instructions are settled on the evening of the transfer date, at same day value.

Interbank transfers are recorded on the business day after the transfer date. The participants in the clearance are entitled to return debits and credits a number of days after the time they are presented. Payment instructions that are returned are assigned the value of the business day on which they were presented.

Financial activity deriving from the return of credits has been settled in the Masav since December 2009.

According to Bank of Israel directive, HTM-2010-1, with effect from July 1, 2010, the transfer of payments in the Banks' Automatic Clearing House (Masav) at an amount exceeding NIS 1 million has been prohibited, except for circumstances when one of the exceptions specified in this directive applies.

1Except for branches operating in the Gaza Strip, whose representation by Bank Hapoalim and Bank Discount ceased in January 2009.