NIFT and its Role in

Clearing Operations
Introduction of NIFT:
• National Institutional Facilitation
Technologies (Pvt.) Limited
• Incorporated in September 1995
as a joint venture between
Introduction of NIFT:
• A licensed clearing house of
Pakistan.
• NIFT’s Board comprises of
– 14 directors; 7 from banks and 7
from the private sector.

Introduction of NIFT:
• All Scheduled banks operating in
Pakistan are
– members of NIFT's clearing
system and
– the State Bank of Pakistan
monitors the clearinghouse
operations.
• As of May 2009, 40 commercial
banks and their 5571 branches
in 185 major cities, 20 data
centers utilize NIFT’s services.

SBP and NIFT
•
•
•
•
SBP and NIFT
• The NIFT collects the financial
instruments and after
processing them provides the
inter-banks’ position for
• Settlement to the concerned SBP-
BSC office where the position of
each bank is settled by making
debit / credit entries in their
respective current account.
•
Components of NIFT
Components of NIFT:
• NIFT is composed of 4
components:
Cont…
Cont…
Clearing Services
offered by NIFT
Services Provided:
NIFT and Clearing
Operations
Need for a Clearing House
• The main operational bottlenecks
faced by the banks were:
•
The Clearing House
• Rather than each bank working directly
with every other bank in the economy,
checks are processed through
centralized clearing houses.
• CLEARING has been derived from the word
“CLEAR” and is defined as
•
Function of Clearing
• The basic function of clearing is to
facilitate the customers in
collection of their cheques of other
banks whether they are in city or
outside city.
•
Role of Nift in Clearing
Operations
Concept of Inward & Outward
clearing under conventional
System
• Banker’s Clearing House
– All member bank’s representatives met
to exchange negotiable instruments.
– Business of clearing normally conducted
in two sessions:

Role of NIFT
• Conventional Clearing house now replaced
by NIFT
• All clearing items routed through NIFT
• The main changes are:
– Creation of direct relationship with each
branch and dispensing with the role of
the central branch at multi-branch-banks .
– Merger of intra-bank clearing or transfer
delivery into inter-bank
– NIFT collects the outward clearing directly
from each & every branch and arranges
processing, presentment and processing of
returns, providing the net position to the
central bank and necessary scrolls,
reports and advices for accounting
entries to all banks and their branches
List Of Clients
1 Albarka Islamic Bank 21 JS Bank Limited

2 Allied Bank Ltd. 22 KASB Bank Limited

3 Arif Habib Bank Ltd 23 MCB Bank Limited

4 Askari Bank Limited 24 Meezan Bank Limited

5 Atlas Bank Limited 25 My Bank Limited

6 Bank Al-Falah Limited 26 National Bank of Pakistan

7 Bank Al-Habib Limited 27 NIB Bank Limited

8 Bank Islami Pakistan Limited 28 Oman International Bank

9 Bank Of Khyber 29 Royal Bank of Scotland

10 Citi Bank N.A. 30 SAMBA Bank

11 Deutsche Bank Asia 31 SILKBANK Limited

12 Dubai Islamic Bank Pakistan Limited 32 SME Bank

13 Emirates Global Islamic Bank 33 Soneri Bank Limited

14 Faysal Bank Limited 34 Standard Chartered Bank

15 First Dawood Islamic Bank Ltd 35 State Bank N'Nazim Abad

16 First Women Bank Limited 36 State Bank of Pakistan

17 Habib Bank Ltd 37 The Bank of Punjab

18 Habib Metropolitan Bank Limited 38 The Bank of Tokyo Mitsubishi UFJ Ltd

19 Hong Kong & Shanghai 39 United Bank Limited

20 Industrial Development Bank 40  

Source :
http://www.nift.com.pk/clientsnift.htm
The Clearing Process
Receiving of Cheques and sending
them to NIFT/ Outward Clearing


–
Procedure at the clearing
House (NIFT)
Inward Clearing
• Cheques received by the bank from other
banks.
• Cheques drawn by the bank customers on
their account in favor of other parties.
• On Receipt:
•
Difference Between
Inward & Outward

• In Inward we are the Paying Bank whereas

in Outward we will act as a Collecting
Bank on behalf of customer & will
launch the instrument in clearing.


•
•
Graphical Représentation of
Clearing Operations
NET Settlement Procedure
Payment System-
Charges of NIFT
• NIFT charges a certain amount
per instrument for availing its
services.
Returns through NIFT:
• If Cheques are not honorred either
because of:
•
•
•
•
•
•
•


• Returned through nift along with a

cheque returned objection memo
Cont…
• Cheques are either lodged again in
outward clearing or returned to
customers by canceling bank’s all
stamps, based on the reasons.
•
Same Day Clearing
• Payment is made on the same day the
cheque is presented to the bank.
• Extra Amount Charged from customer
• Bank practice some pre-requisites
•

Advantages of Adopted
Procédure
For Bank !!!
• The Advantages for the Bank are:
•
For the Customer