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Component 6

Prepared by Nazmul, Sadi

Process Ref 4
Date February 24, 2011

Name of process NSD-Shanchay Patra (Household Investment) sell

Version 1.0

B PROCESS BACKGROUNG & SUMMARY Directorate of National Savings sells its household investment Bonds through Bangladesh Bank, commercial Banks, Post office & its own booth in Bangladesh Bank & Sonali Bank. This process mainly pictures role of debt management department of Bangladesh Bank & its overall management in Shanchaya Patra sells through commercial Banks. Instrument scripts are managed & printed under supervision of NSD but the stock maintenance & distribution is maintained by DMD of Bangladesh bank. This script, authentications, Sells & re-payments involve many manual ledgers & registers. Bangladesh Banks Shanchaya Patra section manages the sell operation of the bond, maintains the ledgers and does necessary accounting. Debt Management department compiles the aggregate sells of the commercial banks & BB branches & sends that to NSD, report against all sells go to CGA office where CGA & NSD reconcile the accounting. C.ENTITY DETAILS Ref Main Entities 1 Debt Management Department, Bangladesh Bank 2 Shanchaya Patra Section, Bangladesh Bank 3 Cash Counter BB regional Branch
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Responsibilities Management of domestic debt, sell operation control Conduct Sell operation BB receives payment against Bond, deposits to Vault & updates PAD to credit Government account Credit/debit Government concerned accounts & updates CGA Credits/Debits Government account maintained with DAD Updates Government accounts/TSA Conducts accounting processing & reconciliation

Public Accounts Department Bangladesh Bank Deposits Accounts Department Bangladesh Bank Accounts & Budgeting Department, BB CGA

D. PROCESS DESCRIPTION Ref Process Review performance & report 1.0 generation Analysing performance 1.1 Setting Target for Bond Sells 1.2 1.3 1.4 Administering the Sell of bond Report generating


Process Description DMD prepares report of last year performance & achievement Domestic debt requirement is analysed Based on last year achievement & requirement of the current year a target of domestic debt is set. DMD complies the report obtained from BB branches & commercial banks DMD generates periodical report on bond sell, encashment, tax retained & sends the report to NSD

Ref 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9

Process Distribution of Target SPS section conducts operation Application Processing Approving Depositing Deposit by Cash Cheque receiving Cheque processing Cheque clearing Cheques return


5.3 5.6


Account opening


2.11 2.12 2.13 2.14 2.15 3.0 3.1 3.2 3.3 3.4 3.5

Instrument preparation Delivery of Instrument Matching with Cash received and cheques cleared A periodic report is prepared & sent to DMD (Process 1.3) Voucher preparation Applicant initiates Application fill up Submitting Application Receiving approval Depositing Money Receiving the counter part

4.4 5.5

Process Description Expected outcome of the BB Branches are notified Application for Shanchay Patra is received from applicant (from process 3.0) An counter officer checks the necessary papers After checking the necessary documents the application gets approval for depositing After approval applicant is to get back the application for depositing money by cash or cheque If the applicant desire to deposit the money by cash he gets back the application (go for process 3.3) The cheque is received for clearing The cheques all accumulated that day is prepared for clearing Cheques are forwarded to PAD for clearing PAD returns the dishonoured cheques after the cheque settlement process is done in clearing house along with a report of cleared cheques. A handbook register is received with list of cash received against application (from process 4.2), which along with the list of cheques received are in process for account opening Instrument register is updated on issue, instrument is written, authenticated Instrument is finally signed & delivered to applicant The cash register received from cash section is matched with bonds issued, similar process is run for clearing cheques. A report on sells, early redemption, tax retained is prepared monthly & sent to DMD Credit voucher is created & sent to Cash section & another to PAD for clearing cheques An applicant comes bank & takes an application to fill Applicant fills up the application & attaches all necessary document with it Along with all documents & photographs applicant submits to the section (Process 2.1) Applicant receives application after approval for depositing money to the cash counter Applicant deposits money to cash counter with a deposit slips Applicant receives the sealed & signed counter part of the deposit slip, which he later uses for collecting the instrument.

Ref 3.6

Process Receiving Instrument



Cash receipt

3.4 3.5

4.1 4.2 4.3 4.4 4.5 4.6 5.0 5.1 5.2 5.3 5.4 5.5 5.6

Entering in register Preparing handbook register Cash Book Receiving Voucher Matching The voucher Endorsing the voucher PAD receives voucher of SP sell Report generation Receives Cheque for clearing Clearing House activity Clearing Cheque settlement Updating DAD Update at DAD 2.9 2.7 2.9 2.15 2.10


CGA send report for matching

5.8 5.9 5.10 5.11 5.12

Accounts update & reconciliation Reconciliation If not, reconcile with DAD & PAD Check if error is detected Sending edited report to CGA

Process Description After completion of all process (Process 2.12), the applicant receives the instrument from the SP section showing the counter part of deposit slip Applicant deposits cash to the cash counter only after the Shanchaya Patra section had received the application after scrutinizing all documents. Returns the counter part of the deposit slip to the applicant Cash counter enters all entry of cash receipt for Shanchaya Patra in a book A handbook register is updated & sends that register with all application to SPS Prepares a cashbook on cash receipt for Shanchaya Patra which it matches with voucher of Shanchaya Patra Sections Cash counter office receives the voucher from SPS on cash sell of SP to credit PAD Cash counter matches the voucher with its cash received against sell of Shanchaya Patra Cash counter officer endorses the voucher after checking the figures & send s to PAD with the workbook PAD receives voucher from cash counter on Shanchaya Patra sells to credit PAD prepares a report on cash credit to NSD in pre-specified code PAD receives cheques for clearing If cheque is not settled, PAD returns those to Shanchaya Patra section Clearing house settles the cheque PAD updates the respective accounts PAD prepares reports on Cash & clearing receipt & send to SP section, DAD with a register, another report to CGA with voucher DAD records in government account matching the voucher & the registers, prepares a report , sends to A&BD, register is returned to PAD CAO, IRD at CGA office receives the vouchers with the report which he tallies with NSD report & send a copy to A&BD for matching the entry A&BD receives a report from DAD, which it updates with government account & also matches with report it gets from CGA If reconciliation matches, process ends, if not then it returns to CGA for their own action. If error is found , A&BD takes correction measure with DAD & PAD If error is not found, confirmation is sent to CGA to find the error on their part. If error is found, that is to be corrected and update CGA

Ref 6.0 6.1 6.2 6.3 6.4

Process CAO IRD receives report at CAO office Updating NSD account Updating iBAS Prepares final report & send to A&BD for matching Input to iBAS


6.5 6.6

Final data updated Final Report

Process Description CAO IRD receives report with voucher from BB PAD offices on Shanchaya Patra sells CAO updates Accounts of NSD entering data into iBAS iBAS updated & generates on-demand report Hard copy report is generated from iBAS to be sent to A&BD of Bangladesh Bank for reconciliation. After receiving reconciled report from BB, CGA updates iBAS with adjusting entry accordingly. If no error reported, iBAS closes day operation Takes correction measure if error is found & be corrected by CGA. Transaction cycle completes for the day

E. PROBLEMS & REQUIRMENTS Ref Identified Weakness/problem Too many sections & processes are 1 involved in receiving & authenticating the payment before issuing the bond. Voucher, registers move from one section to another. Many register records same data.


Suggested improvement/requirement A software system is underway in Shanchaya Patra section for managing Bond records, accounts holders record & transactions. These all will require to be entered again in the Accounting software of the branch. An integrated software system originating from SP Section can facilitate others in receiving the same data avoiding the duplication of data entry. On-going computerisation can focus on it & preparing report & voucher directly from the systems. Instrument can be dematted (dematerialised from paper to electronic), electronic instrument can be more efficient in using the same as collateral against loans. NSD can build a central depository system to have more control over it its management. A strategic policy can be developed in this regards. Unless a computerised system is built, management decision cant be made on facts, like NSD cannot differentiate the payment against maturity & early redemption until they receive the voucher & enters that. Cant even monitor day to day operation for target & achievement analysis. Even treasury position & inflow cant be matched in need to manipulate domestic debt.


Paper Instrument


Lack of Information


Error data entry

In many instances accounting mismatches originate from wrong data entry, if BB incorporates the required functionalities in their on-going computerization & generates the same data for CGA, the rate of error is likely to be reduced, if change management in BB has got effect in data update methodically in CGA, then the differences can be omitted. An IT guideline is required here.

F. Attachment