Automation Of The Cheque Clearing System

Project and Seminar Material for Computer Science and Computer Engineering

Automation Of The Cheque Clearing System


Abstract


This study aims to find out empirical analysis basically on applied research aimed at solving the immediate practical problems in the banking system. The study is on automation of cheque clearing system and selected banks were used as the case study for this research. The sample size determined for this study was one hundred (100) customers and employees of Universal Trust Bank Plc, Ibadan branch. The instrument used for collecting data for the purpose of this research was questionnaire method. The formulated hypotheses tasted in this research work are positive, which shows that automated clearing system has great impact on banking sector and economy as a whole. Also, Nigeria automated clearing systems will achieve truncation in good time given continuous, improvement and amelioration of the technical and operational challenges of the system sustained support of all the share-holders a clear and workable blue print, as well as sustained and effective monitoring and management to the agreed mile stores within a supportive legal environment. This study has important value to the academic it helps the student of Banking and Finance, Business Administration, Marketing, and Economics in our various institutions to have knowledge about the automated system as part of their course or study when they get to the field so that it would not be strangled to them.


Chapter One


Introduction

1.1 Background of the Study

The cheque clearing system is the means whereby bank exchange cheque drawn through clearing system. Clearing system on the other hand is the medium through which proceeds of cheques and other payment instrument are transferred from the paying bank to collecting bank.

The Nigerian automated clearing system (NACS) which book-off on October 21, 2002 as a result of the time function that affects clearing system i.e before cheque is cleared. It involved much stretch in which cheque is not cleared at when needed.

The Central bank of Nigeria (CBN) act No 24 of 1991 empowers the apex bank to facilitating the clearing of cheque and other payment instruments. As a movement forward on the execution of the mandate (CBN) issued the Nigeria banker’s clearing house rule on January 2, 1995. In November 1995 (CBN) governor announced a plan for a dratie overall of the clearing system monetary transaction in Nigeria were largely based on cash and as such had inherent problems, such as security volume of paper its transport, currency sorting changing.

This state of affair creates the moving member of the public to non – cash payment instruments was hampered by the clearing processes, which was largely manual, the services to the customer was prior and cheque based on transaction were use prone to fraud “the clearing circle look between 5 to 15 working days”.

The clearing process was very rowdy with too many banks participating on clearing. The process was frequently late in balancing the book and prone to human awor.

This made it very difficult for central bank of Nigeria (CBN) to calculate and advise on the net settlement figures on time after the days clearing. Although many of the instrument had magnetic character recognition (MICR) code them the lack of automated meant that MIC code lines and infrastructure would not be used.

This meant a waste of consideration investment made in the form of magnetic link character recognition (MIRC) code line information processing infrastructure to fund solution to the problems a committee was set-up its report formed the basis of the banker’s committee decision on June 16, 1996 which approved the automated of the clearing process to more zone within the country with Lagos having more zones” reduce the number of clearing days to buster consumer confidence and encourage. The uses of non cash instrument also reduce number of clearing bank to make the process number of clearing bank to make the process more manageable, faster it was reasoned that automated would make used of [MICR] technology possible, which would further bring speed and efficiency into clearing processing with the potential to reduce the clearing float that introduce networking between the parties involved in clearing these was expected in unlock the benefit of electronic banking for Nigerians.


1.2 Statement of the Problem

The problem of this study is to found out empirical analysis basically on applied research aimed at solving the immediate practical problems in the banking system.


1.3 Objectives of the Study

  1. To access the significance of automated cheque clearing system.
  2. To make the process of cheque clearing faster and efficient.
  3. To cut the number of cheque clearing days, so that consumers will have the confidence and courage of the uses of non-instrument.
  4. To eliminate identity difficulties and encourage development and integration of other electronic payment and settlement product.

1.3 Research Questions

  1. Is automated cheque clearing system significant?
  2. Can the process of cheque clearing be faster and efficient?
  3. How can the number of cheque clearing days be cut down?
  4. How can identity difficulty be eliminated to encourage development and integration of other electronic payment and settlement product.

1.4 Research Hypothesis

  • Ho: Automated cheque clearing system is not significant.
  • Hi: Automated cheque clearing system is significant.

1.5 Significance of the Study

This study has important value to the academic it helps the student of Banking and Finance, Business Administration, Marketing, and Economics in our various institutions to have knowledge about the automated clearing system as part of their course or study when they get to the field so that it would not be strangled to them.

Community:

It helps people in community especially those who enjoy banking services by providing quick and faster service for them for instance when a cross cheque is drawn to any bank, the customer of collecting bank enjoy quick and faster payment.

Society:

The introduction of (ACS) growth and economy development in which society are the beneficiary.


1.6 Scope of the Study

The study is on automation of cheque clearing system and selected banks were used as the case study for this research.


1.7 Limitation of the Study

To carry out this project is not an easy task due to circumstances that warrant it such as;

Time Factor:

Time factor is the major factor that hindered the investigation to be carried out is due to the academic situation because daily academic period involved information to complete the project.

Financial Factor:

Financial constraint which make it difficult to buy the material and collection of appropriate data for the project.


1.8 Definition of Terms

Cheque Clearing System:

Is the process of moving a cheque from the bank in which it was deposited to the bank on which it was drawn, and the movement of the money in the opposite direction.

Automation:

Is the use of various control systems for operating equipment such as machinery, processes in factories, boilers and heat treating ovens, switching on telephone networks, steering and stabilization of ships, aircraft and other applications with minimal or reduced human intervention.


Chapter Five


Summary, Conclusion and Recommendations

5.1 Summary

The good of every operation staff is to deliver quality services and in the process exist the customer through their information, it is obviously seen that automated clearing system in Nigeria has improved payment services, which many bank and regarded as customer inconvenience. With introduction of (NACI), level of fraudulent act is reduce because user are trace for every action made through the audit frail, clearing circle of 5 to 15 working day, no-cash payment instrument was curbed late in balancing the book and prior to human error in foregone.

A bank automated clearing system existed its customer statement are timely delivered, that the operation staff are on the alert and caution always that the balancing services is always decent and efficient that agreement reached nite customers are not unilateral breached, I that customer request and instruction are carried without delay, the errors in account are eliminated, that fraud are non-existent in customers transaction and that efficient of the customer at all times and at all levels.

Moreover, this research project base on current banking situation in Nigeria economy also it is theoretical approach with reference to financial textbook, financial report, and financial magazine e.t.c.

Finally, the formulated hypotheses tasted in this research work are positive, which shows that automated clearing system has great impact on banking sector and economy as a whole.


5.2 Conclusion

The job of the clearing officer is multi faceted. He is a relation manager, transaction processor and the bank representative at CBN clearing house, asses custodian e.t.c, he is also in constraint interface with customer and non customeralike and is expected to perform exceedingly, It is imperative on every clearing officer to acquaint himself, with all tools necessary for the discharge of his function. This is the foundation for excellent service delivery.

Also, Nigeria automated clearing system will achieve truncation in good time given continuous, improvement and amelioration in good time given continuous, improvement and amelioration of the technical and operational challenges of the system sustained support of all the share-holders a clear and workable blue print, as well as sustained and effective monitoring and management to the agreed mile stores within a supportive legal environment.


5.3 Recommendation

Nigeria automated clearing system has achieved a very excellent start (NACS) has yet to make the second step of a possible six-step journey according to information derived from questionnaire, considering (NACS0 has been only a year, consider it major success story.

However (NACS) must not go through all the success story ones. Each participating bank clearing center (PBCC) should design the blue point by the (PRCC) should be aggregated to from the national blue print for cheque clearing in Nigeria achieve these thing must put in place such as:

  1. To educate our banking public and also the operation of the clearing infrastructures on the banks.
  2. Forum needs to come together and share opinion about progress and challenges of the system so far, this needs to be done as quickly as possible because genuine feedback is important for sustenance of the success made so far.
  3. Each PBCC is advised to carry out a value of being a PBCC is worthy all the expresses in other words are there any major benefit that will be lost if bank is not a PBCC? Then a business choice is mode between being a PBCC and being an indirect participant.
  4. The development act approval of appropriate electronic transaction act for our payment system need to be pursed vigorously.

NOTE

If all above recommendation can be put in place, Nigeria automated clearing system will be more effective than ever also complete with foreign countries clearing system.


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