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BACH in Definition
BACH Component
BACPS
1. Central Bank Started Project on 2008 partnership with DFID, UK
2. Payment & Settlement System Regulation issued on 2009
3. MICR Cheque issue started from 2009
4. BACPS Rules and Procedure Circular Issued on 17.01.2010
5. Live Day Simulation (LDS) started on 04.08.2010
6. BACPS go Live operation Started on 7.10.2010
BEFTN
1. BEFTN Operating Rules issued on 10.08.2010
2. BEFTN Live Operation started on 28.02.2011
* This paper is prepared as per BACPS & BEFTN rules & Procedures
BACH Infrastructure
Cheque Orientation:-
Front View
Instrument No. (7 digit) Routing No. (9 digit) Ins. A/c No. (13 digit) Instrument Type (2 digit)
Rear View
Payee’s A/C no. & Phone No Clearing Stamp Endorsement & Sign Endorsement line print
Manual & Automated Clearing
Abbreviation
1. MICR: Magnetic Ink Character 6. PBM: Participant Banks Module
Recognition 7. OCE: Outward Cheque Envelope
2. CPS : Cheque Processing System 8. ORE: Outward Return Envelope
3. CBS : Core Banking System 9. ICE : Inward Cheque Envelope
4. CH : Clearing House 10. IRE : Inward Return Envelope
5. CHM: Clearing House Module 11. IQA : Image Quality Analysis
Processing at PBM
PBM:- Participating Bank Module
The BACPS Participating Bank Module (PBM) provides cheque envelope validation and provides
an interface for sending and receiving cheque envelopes from and to BACPS.
Protection way -
1) Verifying by UV detector before present
2) Instrument print with erasable UV ink
3) Positive pay Instruction
4) New account alert
5) KYC update and monitoring
Example
Accounting of BACPS
Service Branch of a particular Bank is operating the total clearing house of that bank. This
service branch operates with Bangladesh Bank for cheque processing. But accounting affected
on principal account of that bank at Central Bank. Service Branch always maintains this
operation on behalf of central accounts department i.e. FAD for IBBL. The total accounting
procedures are as follows:
For FAD:-
A. If total clearing house is favorable :
Dr. Balance with Bangladesh Bank
Cr. IBG (service Branch)
B. As a presenting branch:
Dr. Clearing Adjustment
Cr. Party A/C
At present all IBCA/IBDA is originated by service branch i.e. Local Office by automatic process
and branch have to respond that IBCA/IBDA.
Note: Daily balance of Clearing Adjustment A/C head should be kept in nil always.
Bangladesh Electronic Funds Transfer Network (BEFTN)
The Bangladesh Electronic Funds Transfer Network (BEFTN) will operate as a processing and
delivery centre providing for the distribution and settlement of electronic credit and debit
instruments among all participating banks. This Network will operate in a real‐time batch
processing mode. All payment transactions will be calculated into a single multilateral netting
figure for each individual bank. Final settlement will take place using accounts that are
maintained with Bangladesh Bank.
Participants in BEFTN
The EFT Network is a multilateral electronic clearing system in which electronic payment
instructions will be exchanged among Scheduled Banks. The system involves transmitting,
reconciling and calculating the net position of each individual participant at the end of each
processing cycle. The participants involved are:
(a) Originator.
(b) Originating Bank (OB)
(c) Bangladesh Electronic Funds Transfer Network (EFT Operator)
(d) Receiving Bank (RB)
(e) Receiver
(f) Correspondent Bank
a) Originator
The Originator is the entity that agrees to initiate EFT entries into the network according to an
arrangement with a receiver. The originator is usually a company, government agency or an
individual directing a transfer of funds to or from a consumer’s or a company’s account. The
originator executes an EFT fund transfer entry through an Originating Bank (OB).
e) Receiver
A receiver is a person/organization who has authorized an Originator to transmit an EFT entry
to the account of the receiver maintained with the Receiving Bank (RB).
f) Correspondent Bank
In some cases an Originator, Originating Bank or Receiving Bank may choose to use the
services of a Correspondent Bank for all or part of the process of handling EFT entries. A
Correspondent Bank’s function can include, but is not limited to, the creation of EFT files on
behalf of the Originator or acting on behalf of an OB or RB, respectively. All Correspondent
Banks must be approved by Bangladesh Bank before a bank enters into an agreement with the
Correspondent Bank.
Authorization
A written arrangement with the originating company signed by an employee or customer to
allow payments processed through the EFT Network to be deposited in or withdrawn from his
or her account at a bank. Authorization can also be a written agreement that defines the terms,
conditions and legal relationship between Originator and Receiver.
Consumer payments that could be made via the EFT network include credit applications such
as payroll, dividend, interest and annuity payments and so on. Consumer EFT debit applications
include the collection of utility bills, insurance premiums, loan installments and other recurring
obligations.
Corporate EFT applications include cash collection and disbursement, corporate trade
payments, government, tax payments etc. Cash collection and disbursement allows companies
to achieve efficiency in cash management through intra‐company transfer of funds. Corporate
trade payments enable corporations to exchange both data and funds with trading partners,
facilitating an automated process of updating their accounts receivable and accounts payable
systems.
Payment Application
I. Consumer Applications
• CIE – Customer Initiated Entry: Customer initiated entries are limited to credit applications
where the consumer initiates the transfer of funds to a company or person for payment of
funds owed to that company or person, typical example of these entries are utility bill and other
Internet banking product payments.
• PPD – Prearranged Payment and Deposit Entry
Direct Deposit: Direct deposit is a credit application that transfers funds into a consumer’s
account at the receiving bank. The funds being deposited can represent a variety of products
such as payroll, remittances, interest, pension, dividends and/or refunds, etc.
Settlement
Settlement is the actual transfer of the funds between participating banks to complete the
payment instruction of an EFT entry. The transactions processed by the BEFTN will affect the
accounts of the concerned banks maintaining accounts with BB at the end of each processing
cycle.
Legal Framework
1) The EFT process operates from beginning to end through a series of legal agreements.
2) BEFTN Rules and Procedures
Other laws/regulations that have a direct bearing on EFT operation are listed as under:
• Bangladesh Bank Order, 1972 (Amended 2003)
• The Banks Companies Act, 1991
• Money Laundering Prevention Act, 2009
• Information and Communication Technology Act, 2006.
• The Bankruptcy Act, 1997
• The Foreign Exchange Guidelines, Volume 1 & 2.
• Foreign Exchange Regulation Act, 1947.
• The Bangladesh Telecommunication Act, 2001.
• Anti Terrorism Act 2009
• Combating on Financial Terrorism Act 2013
• Bangladesh Payment and Settlement Systems Regulations, 2009 (amendment 2013)