GROUP MEMBERS

Muhammad Bilal F08B003

Adeel Ishaq F08b038
Faryal Ayub F08B028
Asif Shan F08B127
M.Umair Muzaffar F08B116
 CLEARANCE
AND
CLEARING PROCESS IN NIFT
Background
 Exchange Of money
 Insecure cash Transactions
 Withholding Tax
 Problem Of Carrying large amounts
 Importance Of Cheques
Cheque:
 Cheque or Check is a document (usually a
piece of paper) that orders a payment of
money.
 The person writing the cheque, the drawer,
usually has a chequing account where their
money is deposited.
 The person in favor of which, cheque is
written is known as payee.
Information Available On Cheque
The drawer writes the various details on
cheque including the money amount, date,
and a payee on the cheque, and signs it,
ordering their bank, know as the drawee, to
pay this person or company the amount of
money stated on the cheque.
Clearing:
The word clearing has been derived from the
word “Clear” and is defined as “ a system by
which banks exchange checks and other
negotiable instruments drawn on each other
within a specific area and thereby secure
payment for their clients through the
Clearing House at specified time in an
efficient way”.
Clearing House:
The clearing house helps in transfer of funds
from one bank to another for the purpose of
facilitating the payment of cheques, demand
drafts and other financial instruments.
 Part Of State Bank Of Pakistan
 Commercial banks(Members Of Clearing
House)
 Representatives Of All Banks
 Clearing Process in clearing house
• cheques are received by UBL that are drawn
on United Bank along with deposit slip
• stamp for cheque received for collection
• cheques are scrutinized and are then entered
in clearing register
• handed over to clearing officer
• Clearing officer checks and verifies title of all
the cheques
 Clearing Process in clearing house
 Special crossing, endorsement and clearing
stamps
 Cheques of each bank are sorted and arranged
branch wise
 All the cheques are then entered into the
clearing system of bank
 Clearing schedule
 Clearing Process in clearing house
 Cheques are delivered to the respective banks
in clearing house of SBP between 10.00 AM
 Clearing house schedule handed over to the
officer clearing house SBP
 Cheques received in clearing are given to the
officer cash department
 Officer cash department pays these cheque by
canceling
Returns:
 cheque return memo contains reason for
return
 cheque is entered into the cheque returned
register and bank charges are deducted
 at 2:00 PM delivered to the same bank in
second clearing
 give schedule of clearing figure to the officer-
clearing SBP
 Settlement Process In Clearing House
 Members of clearing house maintain accounts
with State Bank of Pakistan by debit and credit
 If on a particular day, a bank delivers cheques
and other negotiable instruments worth more
than the total amount of cheque received by it
those bank accounts with State Bank of
Pakistan will be credited with the differential
amount.
 Settlement Process In Clearing House

 On the other hand, if the total amount of

cheques and other negotiable instruments
draw on a certain bank by other bank is more
than the total amount received by it from
other banks, then this bank’s account will be
debited on that day.
Disadvantages
 This system was very costly. Because all the
banks appointed the peon for the collection of
cheques and after the collection the cheques
were sent to clearing house
 Person who was sitting in clearing house was
facilitating by giving medical facility and other
facilities.
NIFT:
 National Institutional Facilitation Technologies
was incorporated in September 1995 .

 All banks in Pakistan, a total of 42, are

participating members of NIFT with branches
spread throughout the country.
 In Karachi alone, the number of participating
branches is a total Of 800.
 NIFT commenced its ACH(account clearing
house) operations in 1996, after signing an
agreement with the State Bank of Pakistan to
oversee clearing operations rendered to all
banks and their branches.
NIFT Today:
 cheques clearing
 ‘return’ (unpaid) cheques processing
 same day clearing (express – 2 hrs. clearing
service)
 intercity clearing
 branch & inter bank settlement
Value added services:
 Utility Bill Payment
 Both gas distribution companies of Pakistan
(SSGC and SNGPL),
 Telecommunication Company (PTCL),
 Cellular companies (Mobilink and Telenor)
 oil refinery,
 insurance companies
 Settlement Process of NIFT
 NIFT collects cheques, demand drafts etc. from all
the branches of different banks and send them to
the branches on which these are drawn for clearing.
 NIFT prepares a sheet for each branch showing the
number for instruments and amount in its favor and
drawn on it and sends it to each branch. A similar
sheet for each bank is also sent to clearing house of
SBP where accounts of banks are settled in the
same manner.
Different Types of Clearing:
 Regular clearing/ Cash Clearing
 Inter Branch Clearing
 Direct Clearing
 Outward Clearing
 Inward clearing
Regular clearing/ Cash Clearing:
If the cheques is for the same bank, and drawer
and the payee both have the account in the
same bank and also in same branch’ the simple
bank stamp is used.
Inter Branch Clearing:
If the cheque is for same bank but different
branches, transfer delivery (TD) stamp and
clearing stamp is used. 
Direct Clearing:
The type of clearing in which cash clearing is
done with the co-operation of both banks .
There is no role of stat bank or UBL or NIFT.
Usually direct clearing is done in rural or
backward areas where there is no network of
clearing house and only few commercial banks
are operating.
 
Outward Clearing
Outward Clearing:
When cheques and other negotiable instruments
drawn upon other banks like MCB, ABN-
AMRO etc. are presented in UBL to deposit
them in the respective payee’s accounts, these
instruments are lodged in outward clearing.
When an instrument is accepted at the counter to be
presented in outward clearing, officer takes the following
points into consideration;
 Instruments plus deposit slip received from the
customer.
 The instruments are received carefully by checking
like :
The name of the branch appears on its face where
it is drawn.
It should not be stale or post dated or without
date.
Amount in words and figures does not differ.
.
Signature of the drawer on the instrument
Instrument is not mutilated.
 No material alteration, if so, it should be
properly authenticated.
Any other bank’s clearing stamp is cancelled
by the same bank.
The amount of the instrument is same as
mentioned on the deposit slip and counterfoil.
 Instrument is stamped and counter foil is
returned to the customer.
 Document number is written on the deposit
slips.
 Instrument is separated from the deposit .
Bunches of instruments are made.
 A summary receipt (bundle cover) of each
bunch showing no. of instruments, total
amount with branch stamp and authorized
signatures.
 About 3:00 the instruments, along with
summary receipts, are sent to NIFT.
Stamps put on the Cheques:
When the cheques are presented in the branch
to be deposited in their respective payee’s
accounts, different stamps are put on cheques
before their lodgment in outward clearing
 Crossing Stamp
 Clearing Stamp
 Bank’s Discharge Stamp
Crossing Stamp:

 “Crossing means two parallel transverse

lines, drawn across the face of the cheques
with or without words written in between
them”.
 In clearing cheques are crossed specially,
Cheques are stamped with bank’s name
between two transverse parallel lines to
constitute special crossing.
ADVANTAGE OF CROSSING:
 Basic advantage of crossing is to save the
instrument from illegal hands.
Clearing Stamp:
Clearing stamp is put on the cheques and deposit
slip, with the following day’s date, as these
cheques would have to be presented in their
concerned drawer banks on the subsequent day.
Bank’s Discharge Stamp:

 Banker’s discharge stamp is also known as

endorsement stamp
 This stamp is on the back side of the
instrument
 The cheques are endorsed by putting the
stamp with words describing “Payee’s account
Credited for UBL, Lahore” plus the authorized
signatures.
Inward Clearing:

The mechanism and system of paying the

Cheques and other instruments drawn on the
UBL by branches of other banks within city or
within clearing networks.
B A
Cheque

Cheque

HBL UBL

Inward clearing

NIFT
 Inward Clearing
Clearing at the Branch
 Instruments are received from NIFT in the
morning
 These Instruments verified like
– Instrument is drawn on the same branch
– The instruments should not be stale or post
dated
 Inward Clearing
Clearing at the Branch

– Clearing stamp should be of the same date

– If more than one clearing stamps then these
should be properly canceled
– Instrument is not damage
– Instrument bears the signatures
 Inward Clearing
Posting of Cheques into the system

– Leaf of the check is verified by UV lamp

– Signatures are verified from the scanned SS(social
security) card
– Status of account , should be an active one
– Balance is available in the account
Outward Clearing Returns:
 Unrealized instruments with objection memo
 Cheque returned Register
 Charges Rs. 100 per instrument
 Instrument returned to the customer
Returns In Inward Clearing:
 Any returns, unrealized instruments, in the inward clearing are
forward to NIFT along with the objection memo.

 The objection memo describes the reason of being unrealized

due to certain reasons. i.e.
 Amount
 Date
 Instrument Number
 Signatures
 All returns are recorded into ‘inward checks returned register ’
and then returned to NIFT representative.
 Clearance Timings

Net Position Time

 

1. Main Inward clearing 9:00 am **

2. Clearing reports & Returns 11:00 am**
3. Outward Clearing 3.00 pm **
Advantages of Clearing

 Clearing does not involve any cash.

 Risk of robbery is totally eliminated.
 Minimum cash is required on counters.
 Time, cost and labor are saved.
 Provides an extra service, so more customers
attracted towards banking.
OUTWARD BILLING Collection
(OBC)
Where NIFT is not Available:
(if the branch of UBL is in swat)
B A

UBL HBL
lahore swat

cou g
rier ari n
cl e
UBL ct
swat D ire
 Where NIFT is not Available
  (if the branch of UBL is NOT IN swat)

B A

courier
UBL HBL
lahore swat
D.D

Demand Draft

HBL
Lahore
THANK YOU