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COMPUTER SCIENCE PROJECT TOPICS

CHEQUE CLEARING SYSTEM IN NIGERIA MONEY DEPOSIT BANKS

CHEQUE CLEARING SYSTEM IN NIGERIA MONEY DEPOSIT BANKS

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CHEQUE CLEARING SYSTEM IN NIGERIA MONEY DEPOSIT BANKS

INTRODUCTION

Cheque clearing system is an arrangement in which financial instruments issued by or to bank customers are presented and exchanged in order for the net position of bank members to be determined and given appropriately in accordance with existing laws.

In addition to cheque clearing activities, this is the system by which indebtedness between commercial banks arising from cheques drawn on them by their customers and paid into other banks is battled.

The settlement is drawn at clearing houses that have a Central Bank of Nigeria (CBN) branch. Every working day, all commercial bank representatives attend at CBN to exchange cheques drawn on them for cheques received from other banks.

Following the exchange of cheques, the difference between the sum of all cheques received and taken is resolved by the issuance of bankers’ payments.

The Nigeria Automated Clearing System (NACs) uses NICR and imaging technology to clear and process cheques online via computer. The method employs reader isorter machines and cutting-edge computer technology to capture and process cheque documents quickly and efficiently.

The clearing system: Cheques are physical transfers between banks that occur concurrently with the processing of electronic data. Although the paying bank receives some data electronically, actual cheques must also be transferred so that the paying bank can examine them for security and fraud protection purposes.

Furthermore, the clearance system operates only on three working days.

Day 1: When a cheque is paid into an account (at the collecting bank), it is sent to the banks’ clearing centre at the end of the working day.

Day 2: All cheques received are sorted at the clearing centre, and the sort code, account number, and special number on the bottom of the cheque, as well as the amount of the cheque, are electronically forwarded to the banks from whence they were drawn (the paying bank) by 11 a.m.

The real cheque is then delivered to the banks from whence it was drawn.

Day 3: The paying bank debits the payer’s bank account, and they must pay each other based on the total value of all cheques exchanged the previous day.

A cheque may be returned after day 5 if it is discovered to be fraudulent.

1.2 Statements of Problems

Banks may incur losses if communication links between their branches are inefficient. To avoid issues, the courier system must be even more functional than previously.

Most banks will be excluded as participating bank clearing centres (PBCCs) because they may be unable to achieve the necessary 1 billion deposits; these banks will be at the mercy of the participating bank clearing centre (PBCC).

If the collecting bank pays the needs of a defective/forged instrument before maturity, it will be held completely accountable.

If the presenting/collection bank fails to warn the paying banks, it may be liable for any act of omission, including contributory negligence, that results in financial loss due to the presentation of defective clearing instruments.

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