Banking

2. UNIVERSTY OF KARACHI
KARACHI UNIVERSITY BUSINESS
SCHOOL
MBA Banking & Finance 2014
Semester II

3. ABOUT ASKARI BANK
Askari Bank Ltd (formerly Askari Commercial
Bank) is a commercial and retail bank in Pakistan
It was founded on October 9, 1991, as a Public
Limited Company. On June 21, 2013 the bank was
acquired by Fauji Group. It is a branch of Army
welfare organization. (AWT). The Bank is listed
on the Karachi, Lahore & Islamabad Stock
Exchanges

4. ABOUT ASKARI BANK
Askari Bank has expanded into a
nationwide presence of almost 250
Branches, and an Offshore Banking Unit in
Bahrain. A shared network of over 3000
online ATMs covering all major cities in
Pakistan supports the delivery channels for
customer service. As on December 31,
2013, the Bank had equity of Rs. 9 billion.

6. CLEARING
The transfer of fund from a branch
of bank to the other bank on which
the instrument is drawn, without
involving cash through “state bank’s
clearing house”.

7. TYPES OF CLEARING
Inward clearing
Outward clearing

8. INWARD CLEARING
“Inward clearing means cheques
received by the bank from other
bank”

9. INWARD CLEARING
The inward clearing process decreases the
deposits of the bank.
The main operational task done by the banks
were:
 Validation of customer account with the
“CORE BANKING SYSTEM”(CBU).
 Searching the physical instrument or return
in.
 Archival of all the physical instrument.
•

10. OUTWARD CLEARING
“Outward clearing means cheques
sent for collection”

11. OUTWARD CLEARING
OR
“The cheque of other bank, which the
account holder deposit in their account”
Outward clearing increases the deposits of
the bank.

12. DIFFERENT FORMS OF INWARD /
OUTWARD CLEARING
LOCAL CHEQUE CLEARING
• (within the same geographical/clearing
zone)
INTERCITY CHEQUE CLEARING
• (drawn on a bank outside the local clearing
zone)
FOREIGN CHEQUE CLEARING
• (drawn on a bank/location outside the
country of the collecting bank)

13. EXAMPLE
When we receive inward clearing we have to
debit our customer account and when we receive
outward clearing we have to send it to relevant
bank for payment.
For example:
A cheque drawn on “HBL” deposited in
“MCB” bank is an outward cheque for
“MCB” & is an inward for “HBL”

14. INWARD
In inward we are the
paying banks
OUTWARD
In outward we are the
collecting banks on
behalf of the customers
& will launch the
instrument in clearing
DIFFERENCE

15. CLEARING INSTRUMENTS
Cheques
Demand draft
Pay order
Travelers cheques

16. ROLE OF
NATIONAL INSTITUTIONAL
FACILITATION TECHNOLOGY
(NIFT) IN CLEARING

17. ABOUT NIFT
NIFT - National Institutional Facilitation Technologies
(Pvt.). Ltd. was incorporated in September 1995 as joint
venture between a consortium of six banks and
entrepreneurs from the private sector. All commercial
banks and all of their branches in major cities avail
NIFT services. As of January 2014, 38
commercial banks and their 8382 branches in 273 major
cities, and towns utilize NIFT services through
28 Data Centers.

18. ROLE OF NIFT IN CLEARING
 NIFT commenced its ACH(automated clearing
house)operations in 1996, after signing an agreement
with THE STATE BANK OF PAKISTAN.
 ACH is computer based clearing & settlement
facility for interchange of electronic debits & credit
among Financial Institution.

19. NIFT SERVICES
OVERNTGHT CLEARING
• overnight clearing included return cheques
processing (24 hour clearing cycle)
SAME DAY / HIGH VALUE CLEARING
• Same day/high value clearing included return
cheque processing(3 hour clearing cycle)

20. NIFT SERVICES
INTERCITY CLEARING
Intercity clearing included return cheque processing (48
hour clearing process)
COUNTRY WIDE LOCAL US DOLLAR
CLEARING
Countrywide local US $ dollar clearing included return
cheque processing (5 day clearing cycle)

21. MICR SPECIFICATION
MICR (magnetic ink character recognition) is a
technology used to verify the legitimacy or originality of
paper documents, especially checks. Special ink, which is
sensitive to magnetic fields, is used in the printing of
certain characters on the original documents.

22. MICR SPECIFICATION

23. OUTWARD CLEARING
PROCESS

24. Outward
Cheques deposited
Scrutiny of cheque &
deposits slip
Stamping
Posting
Separate deposits slip &
cheque
Make bundle of 50
cheques per list
Send to NIFT
Bundle cover
Final voucher prepared

25. INWARD CLEARING
PROCESS

26. Inward
Cheque withdrawals
Scrutiny of cheque &
stamps
Posting
Cancelation
Send to account dept
Returns marked
Attach return memo
Return voucher
prepared
Send to NIFT
Transfer stamp

27. REASONS OF CHEQUE
RETURN BY BANK

28. CHEQUE RETURN MEMO

30. ITEMS NECESSARY FOR
CLEARING INSTRUMENTS
Crossing stamps
Clearing stamps
Date(which should be current)
Endorsement stamp on back side
Amount in figures & words should be
matched
Signature verification

31. REQUIRED STAMPS

33. REQUIRED SLIPS

34. DEPOSIT SLIP

35. ONLINE TRANSFER SLIP

36. CLEARING PROCESS
BY NIFT

37. RECEIVING OF INSTRUMENTS
& SEND TO NIFT
• At the front office cheques are received. The cheques are then stamped with
the clearing stamps
• The amount of cheque is then posted in the system. i.e. this amount is Cr. In
the customer’s account
• Next the clearing cheques & other instruments are endorsed by the bank
through the signatures of the of an authorized signatory
• The cheques /other instruments & deposits slip are separated & the clearing
instruments are prepared in the bundles
• Each bundle of clearing instruments is add –listed & counted & send to NIFT

38. PROCEDURE AT NIFT
The instruments received from each bank are then passed
through a scanner.
Preparation of slips which contains the amount & number of
all the instruments received from a bank
Instruments are seperated & are bundled according to their
respective branches
The main account branch account will be Cr. Or Dr by the
net difference

39. NORMAL CLEARING CYCLE

40. SAME DAY CLEARING CYCLE

41. SPECIAL CLEARING CYCLE

42. INTERCITY CLEARING CYCLE

43. ADVANTAGES TO BANK
Central repository
Sound management
Cuts cost
Shorter cycle
Saves employees effort
No loss of cash
Convenient

44. ADVANTAGES TO CUSTOMER
Short cycle
Responsive
Safety
Simplicity