Clearing House Techniques & Clearing House Techniques & OperationsOperations

Before Liberation War

After Liberation War

The State Bank of Pakistan The State Bank of Pakistan

which was the central bank of which was the central bank of

the country had a branch in the country had a branch in

East Pakistan, which was East Pakistan, which was

called “Dhaka Branch”called “Dhaka Branch”

Reorganized the Dhaka Reorganized the Dhaka

branch of the State Bank of branch of the State Bank of

Pakistan and named it Pakistan and named it

Bangladesh BankBangladesh Bank

Reorganization was done by Reorganization was done by

Bangladesh Bank Order 1972Bangladesh Bank Order 1972

Where all scheduled bank Where all scheduled bank

gathered and perform online gathered and perform online

transection that means taking transection that means taking

& giving money through the & giving money through the

help of Bangladesh Bank help of Bangladesh Bank

clearing house.clearing house.

Bangladesh Bank act Bangladesh Bank act

as a medium between as a medium between

many banksmany banks

Without the help of Bangladesh Bank Without the help of Bangladesh Bank

no banks could not perform this type of no banks could not perform this type of

any transections. If branch of any transections. If branch of

Bangladesh Bank is not available then Bangladesh Bank is not available then

Sonali Bank will perform that funtion Sonali Bank will perform that funtion

on behalf of Bangladesh Bank.on behalf of Bangladesh Bank.

Tha first modern bank clearing Tha first modern bank clearing

house was was established in house was was established in

London in 1773.London in 1773.

In United States the first clearing In United States the first clearing

house was founded by New Yourk house was founded by New Yourk

City’s commercial banks in 1853City’s commercial banks in 1853

By the late 19By the late 19thth century, check clearing century, check clearing

house had been established across the house had been established across the

United States.United States.

1.1. To take economic policy.To take economic policy.

2.2. Quick settlement of transaction.Quick settlement of transaction.

3.3. To save time.To save time.

4.4. To accelerate the advantages of transaction.To accelerate the advantages of transaction.

5.5. Influences on the cash deposit of bank.Influences on the cash deposit of bank.

6.6. Assistance in realizing economic condition.Assistance in realizing economic condition.

7.7. Helpful in transfer of money.Helpful in transfer of money.

8.8. To supervise the clearing works of the banks from time to time.To supervise the clearing works of the banks from time to time.

Automated Cheque Processing SystemAutomated Cheque Processing System

Point of TruncationPoint of Truncation

Submission of selected branches listSubmission of selected branches listSubmission of selected branches listSubmission of selected branches list

Cheque image submission for proper truncationCheque image submission for proper truncationCheque image submission for proper truncationCheque image submission for proper truncation

No of point of truncationNo of point of truncationNo of point of truncationNo of point of truncation

Scanning StandardScanning Standard

Back Side: Back Side: Same as Front side of the imageSame as Front side of the image

Software IntegrationSoftware Integration

Communication LinkCommunication Link

BACH HeadquarterBACH HeadquarterBACH HeadquarterBACH Headquarter

BACH Disaster Recovery Site (DRS)BACH Disaster Recovery Site (DRS)BACH Disaster Recovery Site (DRS)BACH Disaster Recovery Site (DRS)

Electronic Fund Transfer SystemElectronic Fund Transfer System

Bangladesh Electronic Fund Transfer Network (BEFTN)Bangladesh Electronic Fund Transfer Network (BEFTN)

Credit Transactions ->> Debit TransactionsCredit Transactions ->> Debit Transactions

Connecting EFT operators via communication linkConnecting EFT operators via communication link

Regular Regular ClearingClearing

High Value High Value ClearingClearing

Manual Paper-based same-day settlementManual Paper-based same-day settlement of large-value paymentsof large-value payments

Foreign exchange clearing system provided by BBForeign exchange clearing system provided by BBForeign exchange clearing system provided by BBForeign exchange clearing system provided by BB

Manual cheque clearing system in the (DAD) of BBManual cheque clearing system in the (DAD) of BBManual cheque clearing system in the (DAD) of BBManual cheque clearing system in the (DAD) of BB

Maximum large value payments can’t exceed 2000Maximum large value payments can’t exceed 2000Maximum large value payments can’t exceed 2000Maximum large value payments can’t exceed 2000

Process through clearing house and (DAD) of BBProcess through clearing house and (DAD) of BBProcess through clearing house and (DAD) of BBProcess through clearing house and (DAD) of BB

The inter-bank check clearing systemThe inter-bank check clearing system

Continued…..…..Continued…..…..

32

1ChittagongChittagong

RajshahiRajshahiSylhetSylhet

B B B B BranchesBranches

65

4KhulnaKhulnaBarisalBarisalBograBogra

7

RangpurRangpur

8

SadarghatSadarghat

9

MotijheelMotijheel

Implementation of BACHImplementation of BACH

BACH’s centralized automated system will reduce BACH’s centralized automated system will reduce settlement and operational risksettlement and operational risk

First Phase – Manual, Paper based clearing ->> First Phase – Manual, Paper based clearing ->> Automated ClearingAutomated Clearing

Second Phase - Offer clearing of electronic credit Second Phase - Offer clearing of electronic credit and direct debit instrumentsand direct debit instruments

Promoting modern payment instrumentsPromoting modern payment instruments

Advantage of Clearing HouseAdvantage of Clearing House

Continued…..…..Continued…..…..

Disadvantage of Clearing HouseDisadvantage of Clearing House

Free software provided may not be accepted by all Free software provided may not be accepted by all your trading partnersyour trading partners

Free software provided may not be accepted by all Free software provided may not be accepted by all your trading partnersyour trading partners

Provided software requires training and additional Provided software requires training and additional time for a learning curve.time for a learning curve.

Provided software requires training and additional Provided software requires training and additional time for a learning curve.time for a learning curve.

Limited by the standard EDI templates of the Limited by the standard EDI templates of the Clearing HouseClearing House

Limited by the standard EDI templates of the Limited by the standard EDI templates of the Clearing HouseClearing House

Dependant on data entry services of Clearing House, Dependant on data entry services of Clearing House, for Paper to Fax submissions for Paper to Fax submissions

Dependant on data entry services of Clearing House, Dependant on data entry services of Clearing House, for Paper to Fax submissions for Paper to Fax submissions

Continued…..…..Continued…..…..

Claimed information sometimes must be entered a Claimed information sometimes must be entered a second time to use carrier-supplied softwaresecond time to use carrier-supplied software

Claimed information sometimes must be entered a Claimed information sometimes must be entered a second time to use carrier-supplied softwaresecond time to use carrier-supplied software

Claims are edited and validated to insure they are Claims are edited and validated to insure they are error free. This is done manually and requires an error free. This is done manually and requires an Additional Point of EntryAdditional Point of Entry

Claims are edited and validated to insure they are Claims are edited and validated to insure they are error free. This is done manually and requires an error free. This is done manually and requires an Additional Point of EntryAdditional Point of Entry

Risk management may be increasedRisk management may be increasedRisk management may be increasedRisk management may be increased

Recommendations…..Recommendations…..

Legal framework and payments oversight need to be Legal framework and payments oversight need to be

strengthenedstrengthened

Settlement of large value payment should be enhancedSettlement of large value payment should be enhanced

Settlement risks in large-value payments need to be Settlement risks in large-value payments need to be reducedreduced

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