Clearing System of Exim Bank

INTERNSHIP REPORT

An Evaluation of Bangladesh Automated Clearing House System on

Exim Bank Bangladesh Limited (Satmosjid Road Branch)
Submitted To:

Siddique Hayat Khan,
Associate Professor,
Department of BBA,
University of Development Alternative
Submitted By:
Mehethe Hasan Sajjad
ID No.-021161088
Department of BBA
University of Development
(U.O.D.A)
Submitted On:
December 14, 2019.

Letter of Transmittal
14th December, 2019.
Siddique Hayat Khan,
Associate Professor,
Department of BBA,
University of Development Alternative,
80, Satmosjid Road, Dhanmondi, Dhaka – 1209
Subject: Solicitation for Acceptance of the Internship Report on EXIM Bank Bangladesh
Limited.
Sir,
Enclosed is a copy of my internship experience report on EXIM Bank of Bangladesh Limited
(Satmosjid Road Branch). I am submitting this report as a part of my of internship course. While
preparing this report, I have tried my level best to follow your instructions and include all the
relevant issues of my internship program.
The entire report is prepared based on my practical experience on EXIM Bank of Bangladesh
Limited, Satmosjid Road Branch. To make this report enriched, I have fulfilled the entire
outline. As you go through the contents, you will find my endeavor in the overall report.
I hope you would be very pleased to accept this report. It was a very enriching and enthralling
experience for me to prepare this report.
Sincerely,
Mehethe Hasan Sajjad
ID No.-021161088
Department of BBA
University of Development
(U.O.D.A)

Acknowledgement
I have worked really very hard while preparing this report. However, it would not have been
possible without the kind support of many individuals. First of all, I would like to thank
Almighty Allah for giving me the opportunity to complete my internship program successfully.
Then, I would like to express my gratefulness and gratitude to all those people who gave me the
inspiration to complete this report. A special thanks to my Internship Instructor Siddique Hayat
Khan, Associate Professor, of University of Development Alternative, whose help, stimulating
suggestions and encouragement gave me the opportunity to coordinate information in writing
this report.
I feel obliged to EXIM Bank of Bangladesh Limited, where I have passed my last three months
and participated in many activities to enrich my practical knowledge. I would also like to thank
Head of the branch, Muhammad Mabin Hossain Khan, Senior Assistant Vice President to give
me the opportunity work on this branch.
I am also in debt of the Manager Operations of the branch Monjur Morshed Khan, Assistant
Vice President; who gave me the opportunity to work under different departments of the branch
and encouraged me a lot in my day to day activities.
I am also grateful to Mr. Sohel Mahmud, Mr. Khan Moniruzzaman, Ms. Ummey Shaheen Zaman
Khan, Ms. Tahmina Gazi, Ms. Rehana Sultana who always helped me in every steps of my work &
guided me. I practically worked with them and they tried to share their perceptions and feelings on
the basis of my realization on my own point. Without the help of all these people, it would be
difficult for me to complete the whole task. It was truly an honor to work and share my
knowledge with them.
I am using this opportunity to express my gratitude to everyone who supported me during my

internship tenure EXIM Bank Bangladesh Limited Limited, Satmosjid Road Branch.
Last but not the least my parents and friends, who were also great sources of mental support in
completing this report by suggesting me with innovative ideas. Their support was very much
significant to me.

Executive summary
This report has been prepared on the basis of experience gathered during the period of internship
at EXIM Bank Bangladesh Limited Limited, Satmosjid Road Branch. Basically, it is a reflection
paper which includes my learning from day to day activity on general banking, Credit Operations
and Clearing section of the branch. The report mainly portrays my duties, activities, learning,
achievements and other issues related to my workings during the internship tenure. The first
section of the report, I have discussed the purpose, methodology, sources of data and limitations
of the study. In the second chapter, there is a clear overview of EXIM Bank Bangladesh Limited
Ltd. In the third chapter, I have showed a literature review on Bangladesh Automated Clearing
House including some definitions of BACPS, BEFTN, Bangladesh Bank Order 1972 etc. In
chapter four, there is an overview of BACH. In chapter five, there is a comparison between
BACH and Traditional clearing system. The traditional paper based payment system compared
with the upgraded technology. In the sixth chapter, I have analyzed the BACH operating
procedure in EXIM Bank Bangladesh Limited Ltd. including its various sections. Chapter Seven
presents SWOT analysis of the study under Bangladesh Bank Order 1972. And in chapter Eight
and Nine, I tried to show some findings. I have also included my findings as an intern and finally
the influence of this system on the overall banking. At last based on my observation, I have
provided some assorted recommendations and concluding remarks.

Table of Contents
Contents
Table of Contents.........................................................................................................................................................5
Chapter- 1: Introduction...............................................................................................................................................9
Background of the Study........................................................................................................................................10
Scope of the Study..................................................................................................................................................10
Objectives of the Study...........................................................................................................................................10
Methodology of the Study......................................................................................................................................11
Source of Data Collection:......................................................................................................................................11
Primary Source...................................................................................................................................................11
Secondary Sources..............................................................................................................................................11
Method of analysis..................................................................................................................................................11
Limitations of the Study.........................................................................................................................................11
Chapter: 2...................................................................................................................................................................12
Literature Review.......................................................................................................................................................12
Literature Review of Bangladesh Automated Clearing House....................................................................................13
Chapter-3:...................................................................................................................................................................16
Profile of EXIM Bank of Bangladesh Limited...........................................................................................................16
Profile of EXIM Bank of Bangladesh Limited...........................................................................................................17
Company Overview................................................................................................................................................17
Export Import Bank of Bangladesh Limited at a Glance........................................................................................17
Vision Statement of Export Import Bank of Bangladesh Limited...........................................................................18
Mission Statement of Export Import Bank of Bangladesh Limited.........................................................................18
Corporate Culture...................................................................................................................................................18
Satmosjid Road Branch..........................................................................................................................................19
General Banking.....................................................................................................................................................19
Customer Service................................................................................................................................................19
Account Department...........................................................................................................................................19
Pay Order (PO).......................................................................................................................................................20
BACH System in Exim Bank Bangladesh Limited.................................................................................................20
Clearing.............................................................................................................................................................. 20
Types of Clearing Instruments............................................................................................................................20
Related Terms.....................................................................................................................................................20
Clearing Sessions................................................................................................................................................20
BACH Operating Rules in Exim Bank Bangladesh Limited...............................................................................20

Chapter-4:...................................................................................................................................................................23
An Overview of BACH..............................................................................................................................................23
An Overview of BACH..............................................................................................................................................24
Introduction............................................................................................................................................................ 24
The BACH components..........................................................................................................................................24
Eligible Instruments for BACPS.............................................................................................................................25
Table no. 4.3.1: MICR encoded payment items and instruments eligible for BACPS........................................25
Participants in BEFTN............................................................................................................................................25
a) Originator....................................................................................................................................................26
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b) Originating Bank (OB)................................................................................................................................26
c) Bangladesh Electronic Funds Transfer Network (BEFTN).........................................................................26
d) Receiving Bank (RB)..................................................................................................................................26
e) Receiver......................................................................................................................................................26
f) Correspondent Bank....................................................................................................................................26
Authorization..........................................................................................................................................................27
EFT Transaction Flow............................................................................................................................................27
Figure 4.6.1: EFT Credit Transaction Flow........................................................................................................28
Figure 4.6.2: EFT Debit Transaction Flow.........................................................................................................28
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Settlement and Posting............................................................................................................................................28
BACPS Operating Procedures....................................................................................................................................29
 Introduction.................................................................................................................................................29
 Jurisdiction..................................................................................................................................................29
 Clearing Sessions........................................................................................................................................29
The presentment cutoffs and settlement times for these sessions are:.................................................................30
Responsibilities of Presenting Bank........................................................................................................................30
Presenting Bank’s Due Diligence...........................................................................................................................32
Responsibility of Paying Banks..............................................................................................................................32
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Paying Bank Due Diligence....................................................................................................................................32
Chapter-5:...................................................................................................................................................................34
A Comparison between BACH and Traditional Clearing System...............................................................................34
A Comparison between BACH and Traditional Clearing System...............................................................................35
Figure 5.1: Comparison between Manual and Automated Clearing System.......................................................35
Figure 5.2: Comparison between BACH and Traditional Clearing System........................................................36
Statistics of Transaction Processed During June, 2019 to September, 2019...............................................................38
Chapter-6:...................................................................................................................................................................42
Analysis of BACH System in Exim Bank Bangladesh Limited..................................................................................42
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Analysis of BACH System in Exim Bank Bangladesh Limited..................................................................................42
Exim Bank Bangladesh Limited maintains some operation procedure for BACH:.............................................42
Incorrect Amount in BACPS Cheque Envelop.......................................................................................................43
Reason for Return and Return Process....................................................................................................................43
Figure 6.4.1: Image of Cheque Scanner..............................................................................................................44
Genuineness of Cheque..........................................................................................................................................45
BACPS Eligible Item Identification........................................................................................................................45
Digital Signature.....................................................................................................................................................46
Inward clearing in Exim Bank Bangladesh Limited...............................................................................................46
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Outward clearing in Exim Bank Bangladesh Limited.............................................................................................46
Collection Procedure for Clearing in Exim Bank Bangladesh Limited...................................................................47
Settlement...............................................................................................................................................................47
Cancelation of ACH in Exim Bank Bangladesh Limited........................................................................................47
Statistics of BACH Transaction Processed OF EXIM Bank BD During June, 2019 to July, 2019.............................48
Chapter- 7: SWOT Analysis.......................................................................................................................................50
Strengths.............................................................................................................................................................50
Weaknesses.........................................................................................................................................................50
Opportunities......................................................................................................................................................50
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Threats................................................................................................................................................................ 50
Chapter- 8: Findings of the Study...............................................................................................................................51
The following findings emerge from the analysis:..................................................................................................51
Chapter-9: Recommendations and Conclusion...........................................................................................................52
Recommendations...................................................................................................................................................52
Concluding Remarks..............................................................................................................................................53
References..................................................................................................................................................................54
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List of Tables
SL No. Particulars Page No.
4.3.1 MICR encoded payment items and instruments eligible for BACPS 11
4.8.1 The presentment cutoff and settlement times for these sessions 16
5.3 Comparison between Manual and Automated Clearing System 21
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6.9.1 Time limitations for inward clearing 25
6.10.1 Time limitations for outward clearing 26
List of Figures
SL No. Particulars Page No.
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4.4.1 Participants involved in an EFT Transaction 13
4.6.1 EFT Credit Transaction Flow 14
4.6.2 EFT Debit Transaction Flow 14
5.1 Comparison between BACH and Traditional clearing system 22
5.2 Comparison between BACH and Traditional clearing system 23
6.4.1 Image of Cheque Scanner 23
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6.7.1 BACPS Eligible Item Identification 24
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Chapter- 1: Introduction
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Background of the Study
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Bangladesh Automated Cheque Processing Systems (BACPS) has started its live operation on
October 7th, 2010 in the Dhaka Clearing House area. BACPS uses the Cheque Imaging &
Truncation (CIT) technology for electronic presentation and payment of paper instruments (i.e.
cheque, pay order, dividend & refund warrants, etc). Bangladesh Bank has introduced the first
paperless Automated Clearing House in the Country which is called Bangladesh Automated
Cheque Processing System (BACPS) and Bangladesh Electronic Fund Transfer Network
(BEFTN). Both systems are being implemented under Bangladesh Automated Clearing House
(BACH) project. These projects are being implemented under several different reform measures
taken by Bangladesh Bank to improve the safety and efficiency in the payment system. Our
EXIM Bank Bangladesh Limited Limited has always been a leader in complying with the
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requirements of the projects i.e., Cheque Personalization, Magnetic Ink Character Recognition
(MICR) encoded cheque book issuing, System Integration Test (SIT) with Bangladesh Bank's
Live & Disaster Recovery sites.
Bangladesh Automated Clearing House (BACH) is the first ever electronic clearing house of
Bangladesh. It has two components, the Automated Cheque Processing System (ACPS) and the
Electronic Funds Transfer (EFT). These two systems are operated in batch processing mode;
where transactions received from the banks during the day, and are processed at a pre-fixed time
and settled through a single multilateral netting figure on each individual bank's respective books
maintained with the Bangladesh Bank. Also, Digital Certificate has been formulated for the first
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time in Bangladesh for secured data communication.
Scope of the Study
EXIM Bank of Bangladesh Limited is one of the leading commercial banks in Bangladesh.
The scope of this study is limited to its Satmosjid Road Branch only. The report covers the
organizational structure, background, banking activities, functions and performance of the
branch. I have mainly focused on General Banking of the branch and mentioned about the
BACH System of EXIM Bank of Bangladesh Limited.
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Objectives of the Study
 To examine the banking infrastructure of the country to develop and flourish BACH and
online banking system in Bangladesh
 To observe the present status of BACH in Bangladesh
 To perform a comparison between BACH and Traditional clearing system
 To identify (if any) bottlenecks of BACH
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Methodology of the Study
The study aims to identify factors affecting Bangladesh Automated Clearing House. The study
has been performed based on the information collected from different sources. The methodology
of the study is given below-
Source of Data Collection:
Primary Source
The primary sources include:
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 Information gathered from conversations with the employees of EXIM Bank of
Bangladesh Limited (Satmosjid Road Branch).
 Information collected from desk work in general banking department.
Secondary Sources
The secondary sources include:
 Annual reports of EXIM Bank of Bangladesh Limited

 Financial Statements of EXIM Bank of Bangladesh Limited
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 Periodicals Published by Bangladesh Bank
 Office files and documents
 Related books and journals of the study
 Website of EXIM Bank of Bangladesh Limited
Method of analysis
The study includes collection of information to evaluate BACH with the aid of different
composition of some articles and published literatures, several tables on the basis of collected
data and various statistical techniques will be applied to analyze the information. The study will
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incorporate detailed explanations and analysis in the report.
Limitations of the Study
The report may have some incompleteness due to some limitations that I have encountered while
completing it, are mentioned below:
1. One of the major limitations was time constraints, as each department has many activities.
This report could have been prepared in a much broader and extensive manner with more
time and space availability.
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2. Some essential data could not be gathered because of confidentiality concerns.
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Chapter: 2
Literature Review
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Literature Review of Bangladesh Automated Clearing House
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Bangladesh Bank introduced Bangladesh Automated Clearing House (BACH), National
Payment Switch Bangladesh (NPSB) and Mobile Financial Services (MFS) to broaden the range
of payment instruments and services. Bangladesh Bank is also very keenly engaged for
improving the inter operability and resiliency of banking, payment and securities infrastructures.
Recently Bangladesh Bank has implemented Real Time Gross Settlement (RTGS), which allows
immediate payments settlements on an individual order basis without netting to fulfill the
requirement of a high value payment system in the country. Also the system is open to both VPN
and SWIFT connectivity, and next gen fin language ISO20022 is chosen as the message format.
Bangladesh Bank may choose to own and/or operate clearing house operations and payment
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systems as it deems necessary or appropriate, including a real time gross settlement system. To
ensure efficient, safe, secure operations of payment systems and for safeguarding the public
interest, the Bangladesh Bank will issue rules, procedures, guidelines, operating directives or
specific instructions as it deems necessary. The Bangladesh Bank owns and operates Automated
Cheque Processing and Electronic Fund Transfer under the umbrella of BACH.
Bangladesh Automated Cheque Processing Systems (BACPS) is the electronic cheque

processing of paper based instruments, which uses Cheque Imaging and Truncation (CIT)
technology. The systems support both intra regional and inter regional clearing and is based on a
centralized processing center located in Dhaka and also in designated clearing regions. The
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proposed process and system conforms to the international best practices and also represent the
most cost effective solution for cheque processing. In the first step of this process, BACPS
participants, commercial banks and related Government offices are sensitized. All the clearing
instruments, i.e. cheques, drafts, pay orders, dividend and refund warrants, etc. are standardized.
Each instrument is encoded with MICR line which includes information of the amount,
transaction code, clients account, routing number and the cheque leaf's serial number. Specially
schemed routing numbers are assigned to the bank branches for easy identification of origin and
destination of instruments. Country wide use of MICR encoded and standardized instruments i.e.
cheques, drafts, pay-orders, dividend and refund warrants, etc. has been ensured. Following
successful System Integration Test (SIT), Live Simulation Test (LST) and Live Day Simulation
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(LDS), BACPS started its 'Live Operation' on October 7 th 2010. Gradually other main cities of
the country have joined the system after that. At present, 85,000 (approximately) regular and
3000 high value cheques and other instruments are cleared through BACPS. On an average, 85
percent of the clearing instruments are cleared through clearing house. Total amount of regular
value instruments cleared is approximately Taka 25 billion and it is approximately Taka 20
billion for high value instruments. The clearing cycle has been brought down to t+0 for high
value cheques and t+1 for regular value cheques throughout the country.
Bangladesh Electronic Funds Transfer Network (BEFTN) is the most critical component in the
development of a modern payments system infrastructure among the present initiatives. BEFTN
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started its 'Live Operation' on February 28th 2011 with 47 banks of the country. The network
started with credit transactions and will gradually progress to debit transactions. A wide variety
of credit transfer applications such as payroll, foreign and domestic remittances, social security,
company dividends, retirement, expense reimbursement, bill payments, corporate payments,
Government tax payments, veterans payments, Government license fees and person to person
payments as well as debit transfer applications such as mortgage payments, membership dues,
loan payments, insurance premiums, utility bill payments, company cash concentrations,
Government tax payments, Government licenses and fees are settled under the network. This
system brings down the operational cost, reduce risk and increase the efficiency of the payments
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process. At the initial stage, approximately 1500-1600 EFT transactions are processed on an
average with an increasing trend. The amount transferred using EFTN is approximately Tk. 120
million per day. BEFTN will be linked to the mobile financial services in the near future. The
mobile networks will provide the gateway for the non bank public to reach bank customers and
businesses and for bank customers and businesses to reach the non bank public. The ultimate
objective of the EFT system is to decrease the paper based payment methods and encourage
paperless payment methods for faster and cost effective transactions especially at the corporate
levels. The EFT facilitates the transmission of payments between the banks electronically in
order to make faster and efficient interbank clearing over the existing paper based system.
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With the mandate of Bangladesh Bank Order 1972 Bangladesh Bank endeavors for promoting
new payment and settlement systems to ease financial transactions, ensure circulation of money
throughout the economy and bring public confidence on the financial sector. In the journey of
modernization of country’s payment and settlement systems, Bangladesh Bank launched
Bangladesh Automated Cheque Processing Systems (BACPS) in 2010, Bangladesh Electronic
Fund Transfer Network (BEFTN) in 2011, initiated Mobile Financial Service in 2011, and
installed National Payment Switch of Bangladesh (NPSB) in 2014. But all these payment
channels were developed to focus the retail payment only. With the launching of RTGS the large
value payment has also been addressed which completes the modernized payment infrastructure
of Bangladesh as well as ensure international best practices in place. And for this great success
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the credit goes to Asian Development Bank (ADB) for being the financial partner in the journey
of RTGS under “Institutional Support for Migrant Workers’ Remittances: Real Time Gross
Settlement (RTGS)” project.
Buffam (2000) depicted that companies that build the better e-business solutions will outperform
their competitors. Companies that build the best e-business solutions will transform themselves
into zero latency enterprises. Companies that choose not to embrace e-business, or do so
ineffectively, will underperform or be driven out of business. Turban et al. (2000) argued that
following points of managerial issues are very important: Focus of Electronic commerce
management; Sales promotion; Purchase process reengineering; Just-in-Time delivery; new
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electronic intermediary business; Provision of solutions; and Business ethics.
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Chapter-3:
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Profile of EXIM Bank of Bangladesh Limited
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Profile of EXIM Bank of Bangladesh Limited
Company Overview
Export Import Bank of Bangladesh Limited was established in the year 1999 under the leadership
of Late Mr. Shahjahan Kabir, Founder Chairman who had a long dream of floating a commercial
bank which would contribute to the socio-economic development of our country. He had a long
experience as a good banker. A group of highly qualified and successful entrepreneurs joined
their hands with the founder chairman to materialize his dream. Indeed, all of them proved
themselves in their respective business as most successful star with their endeavor, intelligence,
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hard working and talent entrepreneurship. Among them, Mr. Nazrul Islam Mazumder who is an
illuminated business tycon in the Garments business in Bangladesh became the Honorable
Chairman after the demise of the honorable founder chairman. He is also the chairman of
Bangladesh Association of Banks (BAB). Under his leadership, BAB has emerged as an effective
forum for exchanging views on problems being faced by the banking sector of Bangladesh and for
formulating common policy guidelines in addressing such problems.
Export Import Bank of Bangladesh Limited at a Glance
The Bank starts functioning from 3rd August, 1999 with its name as Bengal Export Import Bank
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Limited. On 16th November 1999, it was renamed as Export Import Bank of Bangladesh
Limited with Mr. Alamgir Kabir as the Founder Advisor and Mr. Mohammad Lakiotullah as the
Founder Managing Director respectively. Both of them have long experience in the financial
sector of our country. By their pragmatic decision and management directives in the operational
activities, this bank has earned a secured and distinctive position in the banking industry in terms
of performance, growth, and excellent management. Under the leadership of Mr. Lakiotullah, the
Bank has migrated all of its conventional banking operation into Shariah Based Islami Banking
in the year July 2004.
In the year 2006, Mr. Kazi Masihur Rahman became the Managing Director of the bank when
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Mr. Lakiotullah left the bank after completion of his successful 7 years as MD. Mr. Kazi served
in the bank for next five years. Under his leadership, the bank has been placed on a state of the
art centralized IT platform with two modern data centers where world renowned core banking
software TEMENOS T24 is running along with some alternate delivery channels like ATMs and
SMS banking.
On 25th August, 2011, Mr. Md. Fariduddin Ahmed has joined in the bank as Managing Director.
With his long banking experience, EXIM Bank become fully compliant Bank with adequate
capital and good asset quality. After retirement from Managing Director, he has been continuing
his service for EXIM Bank as Advisor since 27th July 2012.
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Dr. Mohammed Haider Ali Miah succeeded Mr. Fariduddin Ahmed on July 25, 2012 and has
created a new dimension in EXIM history becoming the first ever in-house Managing director
and CEO of the Bank. Under his far-sighted leadership, EXIM Bank has not only achieved
uppermost level of performance in almost each arena of its activities but also gained confidence
to place itself as one of the dynamic banks through delivering transparent and standard banking
services to the customers in a compliant manner.
Vision Statement of Export Import Bank of Bangladesh Limited
The gist of our vision is "Together Towards Tomorrow". Export Import Bank of Bangladesh
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Limited (Exim Bank) believes in togetherness with its customers, in its march on the road to
growth and progress with service. To achieve the desired goal, there will be constant pursuit of
excellence in compliance with the Islamic Shariah. We believe the advantages of Islamic
economy can best be extended to the people with a technology-driven modern banking system
that upholds the Islamic values, and Exim Bank envisages making itself a perfect instance of that
kind. The Bank’s strategic plans and networking will strengthen its competitive edge over others
in rapidly changing competitive environment. Its personalized quality services to the customers
with trend of constant improvement will be the cornerstone to achieve our operational success.
Mission Statement of Export Import Bank of Bangladesh Limited

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The Bank’s mission comprises:
 Extracting the full benefit of Islamic banking system for its customers.
 Providing with quality financial services especially in Foreign Trade.
 Maintaining and upgrading a technology-based professional banking environment.
 Maintenance of corporate and business ethics and transparency at all levels.
 Sound capital Base

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 Ensure sustainable growth for the honorable stakeholders.
 Fulfillment of corporate social commitments, and
 above all, to add to the national economy
Corporate Culture
Organizational culture is considered as an essential component of business corporations as it has

the ability to bind organizational members together. The culture and values of our bank have been
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proved as a source of competitive advantage for us and are acting as a key component to establish
the relationship between the bank and our employees and , in turn , between our employees and
our customers. Our culture and values also encourage customers and employees to join us and stay
with us.
EXIM Bank has also been able to improve organizational performance via improving the
performance of individual contributors and also recognizes existing talents to fill up the higher
vacancies within the organization or place them in the right position, wherein the best use of their
abilities can be ensured. Our culture promotes sharing of common goal which ensures harmonious
relationship in the working environment.
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Satmosjid Road Branch
Exim Bank Bangladesh Limited is operating their business activities at Dhanmondi area and the
branch is named as Satmosjid Road Branch. At present the branch is being operated with 28
employees. The Branch offers corporate banking, correspondent banking and others services to
its customers including local corporations, multinational. It is offering a huge range of retail
banking products to provide for the individual banking needs as well.
General Banking
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General banking is the starting point of all banking operations. This is the department which
provides day to day services to the customers. Every day it receives different types of deposits
from the customers and meets their demand for cash by honoring cheques. It opens new
accounts, remit funds, issues bank drafts and pay orders etc. Since a bank is confined to provide
these services every day, general banking is also known as ‘Retail Banking’.
Customer Service
Exim Bank Bangladesh Limited. is providing modern banking facilities to its customers. It is
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committed to fulfill every possible need of customers with high efficiency and satisfaction. It has
a team of dedicated professionals, committed to provide an unparalleled service and to bring
maximum benefits for the customers, the shareholders and the society at large. It’s a great
pleasure for EXIM Bank Bangladesh Limited to introduce following services-
Account Department
Account department is called as the nerve center of the bank. In banking business, many
transactions occur every day and these transactions need to be recorded properly and
systematically as the banks deal with the depositor’s money. Any deviation in proper recording
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may hamper public confidence and the bank has to suffer a lot otherwise. Improper recording of
transactions leads to a mismatch in the debit and credit sides. To avoid these mishaps the bank
provides a separate department, whose function is to check the mistakes in assigned vouchers or
wrong entries or fraud or forgery. This department is called as Account Department.
Pay Order (PO)

Pay Order is an instrument which is used to remit money within a city through the banking
channel. The instruments are generally safe because most of them are crossed. PO gives the
payee the right to claim a payment from the issuing bank. Payment is conducted from the issuing
branch only, which is generally used to remit fund within the clearing house area of issuing
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branch. Payment process of the paying bank is made through clearing and charge only
commission and vat; i.e. if amount is below Tk. 2, 00,000 then commission is Tk. 50 and vat is
Tk. 8 again if amount is above Tk. 2, 00,000 then commission is Tk. 75 and vat is Tk.12. The
bank payment order is in the form of receipt and issued by joint signature of two officials. It
ensures payment to the payee, as the money deposited by the purchaser of PO is kept in the
bank’s own A/C named “Payment Order A/C”. Payment of the instrument is made from the
branch where it has been issued.
BACH System in Exim Bank Bangladesh Limited
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Clearing
In Exim Bank Bangladesh Limited, clearing is the process which refers to a collection proceeds
of instruments of different banks by a collecting bank, through some systematic procedures with
the involvement of Central Bank.
Types of Clearing Instruments
 Cheques (CD, SB, Loan)

 Demand Draft
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 Payment Order
 Others
Related Terms
 Crossing
 Clearing Stamp
 Endorsement
Clearing Sessions
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 High Value
 High Value (return house)
 Regular
 Regular (return house)
BACH Operating Rules in Exim Bank Bangladesh Limited
a) Settlement made through wave

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b) Black and White Image captured for front and back of the cheque
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c) The Cheque is first deposited through a received seal with the help of a slip
d) BACPS Eligible Item Identification
e) Digital Signature
f) Inward clearing in Exim Bank Bangladesh Limited
 For Regular Clearing cutting time is 12:00pm and A/C Debit is at 4:30pm
 For High value Clearing cutting time is 11:30pm and A/C Debit is at 2:30pm
g) Outward clearing in Exim Bank Bangladesh Limited
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 For Regular Clearing cutting time is 12:00pm and A/C Debit is at 5:30pm
 For High value Clearing cutting time is 11:30pm and A/C Debit is at 3:30pm
h) When an Image of an item is not usable due to the quality of the source document, the
Bank at the period of collection returns the physical item to its customer
i) Settlements are made on the basis of the electronic cheque data including the amount
j) To cancel an Automated Clearing House (ACH) payment customer needs to have
an authorized a third party to make it from customer checking and/or savings
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account
k) Signature verification and Account balance verification
l) Verification of date
m) Matching amount and figure
n) Verification of the date of entry error etc.
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Chapter-4:
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An Overview of BACH
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An Overview of BACH
Introduction
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BACH is the overall system and facility that supports the Exchange and settlement of payment
between Participating banks and Bangladesh Bank.
Bangladesh Automated Clearing House (BACH) is the first ever electronic clearing house which
has started live operation in Dhaka from October 7th, 2010. It includes Bangladesh Automated
Cheque Processing System (BACPS) and Bangladesh Electronic Funds Transfer Network
(BEFTN). Bangladesh Automated Cheque Processing System (BACPS) is the electronic cheque
processing system of paper based instruments using a Cheque Imaging and Truncation (CIT)
technology, which supports both intra regional and inter regional clearing and is based on a
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centralized processing center located in Dhaka and other designated clearing areas. BACPS
participants are all commercial banks and related Government offices. Country wide use of
MICR (Magnetic Ink Character Recognition) encoded standardized instruments i.e., Cheques,
Drafts, Pay Orders, Dividend and Refund Warrants etc. has been ensured.
BEFTN is the maiden initiative for electronic (debit and credit) fund transfers. This network
facilitates the electronic transmission of funds between banks, which makes it as a faster and
efficient means of interbank clearing over the existing paper based system i.e., BACPS. BEFTN
is able to handle a wide range and variety of credit transfer applications such as payroll, foreign
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and domestic remittances, social security, company dividends, retirement, expense
reimbursement, bill payments, corporate payments, government tax payments, veterans
payments, government license fees and person to person payments as well as debit transfer
applications such as mortgage payments, membership dues, loan payments, insurance premiums,
utility bill payments, company cash concentration, government tax payments, government
licenses and fees.
The BACH components
The BACH has two components:

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1) Bangladesh Automated Cheque Processing System (BACPS) and
2) Bangladesh Electronic Funds Transfer Network (BEFTN).
Bangladesh Automated Clearing House (BACH) components are- the Automated Cheque
Processing System and the Electronic Funds Transfer. Both of these systems operate in batch
processing mode, where transactions received from the banks during the day are processed at a
pre fixed time and settled through a single multilateral netting figure on each individual bank's
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respective books maintained with the Bangladesh Bank. A state of the art Data Center (DC) and
a Disaster Recovery Site (DRS) have been established comprising of most modern software and
hardware for dealing with the operations of Bangladesh Automated Clearing House (BACH).
The clients of EXIM Bank Bangladesh Limited are availing themselves of modern banking
facilities with the help of these services.
Eligible Instruments for BACPS
Following MICR encoded payment items and instruments are eligible for BACPS
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No. Type of instrument MICR No. Type of instrument MICR
CODE CODE
1 Savings Bank 10 2 Current Account 11

Account Cheque Cheque
3 Refund Warrant 18 4 Banker’s Cheque 12
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5 Pay Order 19 6 Cash Credit Account 13
Cheque
7 Govt. Cheque 31, 32 8 Dividend Warrant 14
9 Credit Card Cheque 20 10 Demand Draft 15
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11 Foreign Taka 13 12 Gift Cheque 16
Demand Draft
13 Fractional Dividend 15 14 Interest Warrant 17

Warrant
Table no. 4.3.1: MICR encoded payment items and instruments eligible for BACPS
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Participants in BEFTN
The EFT Network is a multilateral electronic clearing system in which electronic payment
instructions are exchanged among Scheduled Banks. The system involves transmitting,
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reconciling and calculating the net position of each individual participant at the end of each
processing cycle. The involved participants are-
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, a 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).
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b) Originating Bank (OB)
The originating bank is the bank which receives payment instructions from its client (the
originator) and forwards the entry to the BEFTN. A bank may participate in the EFT system as a
receiving bank without acting as an originating bank. However, if a bank chooses to originate
EFT entries it must agree to act as a receiving bank also.
c) Bangladesh Electronic Funds Transfer Network (BEFTN)
BEFTN is the central clearing facility, operated by Bangladesh Bank that receives entries from
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OBs, distributes the entries to appropriate RBs, and facilitates the settlement functions for the
participating banking institutions
d) Receiving Bank (RB)
The receiving bank is the bank that receives EFT entries from BEFTN and posts the entries to
the account of its depositors (Receivers).
e) Receiver
A receiver is a person or an organization who has the authority as an Originator to transmit an

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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.
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Figure 4.4.1: Participants involved in an EFT Transaction
Authorization
A written document 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.
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EFT Transaction Flow
In EFT terminology, Originator and Receiver refer to the participants that initiate and receive the
EFT entries rather than the funds. Unlike a cheque, which is always a debit instrument, an EFT
entry may either be a credit or a debit entry. By examining what happens to the receiver’s
account, one can distinguish between an EFT Credit and EFT Debit transaction. If the receiver’s
account is debited, then the entry is an EFT debit. If the receiver’s account is credited, then the
entry is an EFT credit.
a) EFT Credits
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EFT credit entries occur when an Originator initiates a transfer to move funds into a Receivers
account. For example, when an organization uses the payroll service at a bank to pay the salary
of its employee each month, it originates the payment through the OB to transfer the money into
the account of the employee; the individual is the receiver in this example. EFT credit
transactions involve both consumer and corporate payments with separate rules and regulations
for each. The most typical consumer EFT application is Direct Deposit of Payroll.
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Figure 4.6.1: EFT Credit Transaction Flow
In the illustration above an EFT credit transaction flow for payroll payment is showed, where an
organization initiates an EFT entry to credit its employee’s account.
b) EFT Debits
In an EFT debit transaction, funds flow in the opposite direction. Funds are collected from the
Receiver’s account and transferred to an Originator’s account, even though the originator
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initiates the entry.
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Figure 4.6.2: EFT Debit Transaction Flow
In the illustration above it is showed that a utility company initiates an EFT entry to collect its
bill from the consumer.
Settlement and Posting
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
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accounts of the concerned banks maintaining accounts with Bangladesh Bank at the end of each
processing cycle. Settlement will be completed using the following processing schedule:
Processing Window Cut Offs, Item Submission, Returns Settlement, Normal Processing is within
00:00 ‐ 24:00 hrs. As provided in BEFTN Rules 10:00 hrs Next Day Settlement and processing
sessions may be reviewed and communicated to member banks by the Clearing House (BACH)
authority from time to time.
BACPS Operating Procedures
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 Introduction
These operational procedures are intended for the use of operational staff within Commercial
Banks engaged in the preparation and submission of Outward payment items to the Clearing
House and in the receipt and verification of Inward items from the Clearing House. The
document makes reference to additional documents which are technology based and contain
specific system details. These procedures deal mainly with the operational issues for image based
Cheque Processing and have to be read with and subject to the Bangladesh Payments and
Settlement Systems Regulation 2009 and the BACPS Operating Rules.
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 Jurisdiction
The cheque image and truncation process is implemented initially in the Dhaka Clearing Area as
a pilot and will gradually be expanded to include all of the clearing operations in Bangladesh.
This document deals principally with the operational procedures for banks utilizing an automated
image based cheque solution and has to be read with and are subject to the and the Bangladesh
Payments and Settlement Systems Regulation 2009 and the BACPS Operating Rules.
Additionally a section is included in this document detailing the procedures to be followed by
Commercial Banks making use of the Bangladesh Bank’s initiated temporary Bureau Service.
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 Clearing Sessions
The Cheque Truncation System is capable of supporting different types of clearing. Each type of
clearing has a separate clearing window known as clearing session. Usually, there are two
presentation clearing sessions and two corresponding return clearing sessions per day.
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The presentment cutoffs and settlement times for these sessions are:
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Clearing Window Cut Offs
Presentment Return Settlement
Regular Clearing 13:00 hrs 18:00 hrs 18:01 hrs
High Value Clearing 12:00 hrs 14:00 hrs 14:01 hrs
Table no. 4.8.1: The presentment cutoffs and settlement times for these sessions
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Clearing sessions may be reviewed and communicated to member banks by the Clearing
House (BACH) authority from time to time.
Responsibilities of Presenting Bank
1. Comply with the BACPS rules
2. Certifies that presented item is a copy of the original instrument

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3. Prima facie genuineness of the cheque be verified with-
a. Due diligence and ordinary care

b. Genuineness of the cheque leaf
c. Material alteration of payee’s name, amount or date
d. Verification by UV detector
4. Instruments, image and data are preserved for 6 years
5. Original cheque is available for inspection within 7 calendar days

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6. If failed, it will result in non-payment of the instrument
7. Credit to customer A/C on settlement date or internal rules of the bank
8. Central Bank’s holding of the Bank’s Settlement A/C to credit on house date
9. Indemnify the Bangladesh Bank processing or settling for the item for any loss or expense
10. Reconciliation
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Presenting Bank’s Due Diligence
As Settlement is done on the basis of image and data, conducting due diligence is the
responsibility of the presenting Bank.
1. Verify the prima facie genuineness of the cheque
2. To be truncated
3. Attempt to detect any fraud, forgery or tampering
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4. Enforce KYC norms in letter and spirit
5. Observe all precautions which a prudent banker takes
6. To check the apparent tenor of the instrument
7. Physical presence of the instrument
8. Tampering visibility with reasonable care etc.
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Responsibility of Paying Banks
A Paying Bank, by manufacturing or using an Account with the Bangladesh Bank Settlement for
items or by accepting an item from the Bangladesh Bank:
1. Comply with the applicable BACPS rules
2. Agrees to process the item in accordance with these rules
3. Authorizes the Bangladesh Bank to charge the amount of a payment items to the paying
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Bank’s Settlement account on the Settlement date
4. Return an approved payment item to the Bangladesh Bank by the deadline in the BACPS
schedule
5. Tailing positive pay instruction from cheque issuer
Paying Bank Due Diligence
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1. Transmission of posting file
2. Digital certificate of verification of Clearing-House Mechanism (CHM)
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3. Payment processing-
a) Signature verification of a customer is performed by their existing customer database
b) Account balance verification through the authorized employees
c) Verification of endorsement by general banking department
d) Positive Pay Instruction by higher authorities
e) Restriction to account by customer or other legal authority

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f) Stop payment verification by the authority
g) Verification of date through their customer database
h) Matching the amount and figure by the authorized employees
i) Verification of the date of entry errors
j) Other prudent practices
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4. Return cheque
5. Request for papers
6. Internal control
7. Reconciliation of clearing difference etc.
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Chapter-5:
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A Comparison between BACH and
Traditional Clearing System
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A Comparison between BACH and Traditional Clearing System
The traditional paper based payment system was a semi-automated system, time consuming and
prone to so many risks. The system was not as par with international best practices. It took t+2 or
t+3 days to clear the cheques and other paper based instruments within a clearing region. The
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inter regional instruments required much longer time to clear.
Bangladesh Bank realized the necessity of upgrading the clearing system. With a view to
developing an electronic payment system, Bangladesh Bank took maiden initiative to replace the
traditional paper based clearing and settlement system by an IT centric fast, secured and efficient
system. With the technical and financial assistance from Department for International
Development (DFID) of United Kingdom, Bangladesh Bank started working to implement
Bangladesh Automated Clearing House (BACH) from October 2006, the first electronic clearing
house in the country.
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Bangladesh Automated Cheque Processing Systems (BACPS) is the electronic cheque
processing of paper based instruments uses Cheque Imaging and Truncation (CIT) technology.
The proposed process and system conforms to the international best practices and also represent
the most cost effective solution for cheque processing. In the first step of the process, BACPS
participants, commercial banks and related Government offices are sensitized. All the clearing
instruments, i.e. cheques, drafts, pay orders, dividend and refund warrants, etc. are standardized.
Each instrument is encoded with MICR line which includes information on the amount,
transaction code, clients account, routing number along with the cheque leaf's serial number.
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Figure 5.1: Comparison between Manual and Automated Clearing System
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Here is a diagram showing the clearing process by using BACH system-
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Figure 5.2: Comparison between BACH and Traditional Clearing System
Comparison between Manual and Automated Clearing System are:
Manual Clearing Automated Clearing
1. There are 45 clearing houses in the country. 1. Only one clearing house instead of 45.
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2. Human resources required in clearing house. 2. No human required in clearing house.
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3. Time consuming. 3. Reduces time consumption.
4. Huge collection cost from outside the city. 4. Collection cost is same as it is in own city.
5. Time session may change by request. 5. Time session is automated and unchangeable.
6. Establishment cost is very low. 6. Establishment cost is very high.
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7. Does not collect charges from clients. 7. Charges are collected from clients.
8. Used by NIKASH or manual ledger. 8. Operated by cheque processing system.
9. Data cannot be saved for a long time. 9. Data and Images can save for 12 years.
10. Same day clearing for few branches only. 10. Same day clearing for the whole country.
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11. Paying Bank preserves own cheques. 11. Presenting Bank preserves the other bank’s
cheques.
12. Non MICR cheque can clear. 12. Non MICR cheque is unacceptable.
13. Positive pay instruction is not mandatory. 13. Positive pay instruction is mandatory.
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14. Paying Bank’s responsibility is higher. 14. Presenting Bank’s responsibility is higher.
15. A non-centralized system. 15. Process under a secured centralized system.
Table no. 5.3: Comparison between Manual and Automated Clearing System
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Statistics of Transaction Processed During June, 2019 to September, 2019
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Chapter-6:
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Analysis of BACH System in Exim
Bank Bangladesh Limited
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Analysis of BACH System in Exim Bank Bangladesh Limited
As a cheque, payment order or bill comes from a bank within the range of local clearing house
then it is sent for collection through the clearing house. The cheque can be crossed or not. If a
customer of Exim Bank Bangladesh Limited deposits a cheque to another bank, which is within
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clearing area, then Exim Bank Bangladesh Limited will credit his amount and collect it (cheque).
Though the amount is credited in the customer’s account but he will not get the money until the
cheque is honored.
Exim Bank Bangladesh Limited maintains some operation procedure for BACH:
Image Capture
Two image segments were captured for all BACPS eligible Items:
a. Black and White Image of the front

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b. Black and White Image of the back
There is no coloured image system in this Bank. Coloured image is more effective for secured
payment. The Bank faces many problems for this.
Usable Image
Image usability is of key importance for allowing EXIM Bank Bangladesh Limited to process an
item on the basis of an Image. The Usable Image is a clearly represented digital picture of an
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item. An Image is usable when all of the following criteria are met:
i. The date field should be available on the image of the item.

ii. The MICR (magnetic ink character recognition) line must present on the Image of the item;
iii. The account number in the MICR line is on the Image of the item.
Incorrect Amount in BACPS Cheque Envelop
Where a BACPS eligible item with an incorrect amount is detected in a BACPS Cheque
Envelope by the Bank at the time of sending, it should notify the Paying Bank about the error
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via fax, email or registered mail and request that the Paying Bank, or its Correspondent Bank.
EXIM Bank Bangladesh Limited is responsible for the difference provided the error is detected
within ninety (90) days after the Item was presented to the Paying Bank. So that, they can take
steps as soon as possible.
Reason for Return and Return Process
When an Image of an item is not usable according to the above definition of a usable Image, the
item is returned within the time frames outlined in the BACPS Procedures. The Bank then re
scans the source document and transmits the Image as a new item to the Paying Bank.
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Figure 6.4.1: Image of Cheque Scanner
Poor Source of Documents
When an image of an item is not usable due to the quality of the source document, the Bank at
the period of collection-
i. It returns the physical item to its customer
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ii. Forward the source document itself to the Paying Bank for payment
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Genuineness of Cheque
 At the time of sending EXIM Bank Bangladesh Limited verifies the prima facie
genuineness of the cheque such as the cheque leaf, name of payee and amount or date to
be truncated and attempt to detect any fraud, forgery or tampering apparent on the face
of the instrument that can be verified with due diligence and ordinary care.
 In such cases where genuineness couldn’t be verified or material alteration is detected;
the bank does not submit such cheque(s) to the BACPS.
Every cheque should be checked by UV detector. It should be ensured that, verification is done
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by UV detector before presenting and instrument printing with erasable UV link.
BACPS Eligible Item Identification
Any High Value item that is presented to a branch outside of the approved geographic area is
returned with the appropriate return reason code.
a. For any transit item, a Sending Point does not logically repair information contained in any
field of the MICR line than the Bank’s routing number field and must enter the amount field.
b. A sending point does enter the account number which does not exist in pre-printed MICR line
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for Government cheques only.
So, It identification procedure is quite time consuming, so Bank sometimes fail to attend the
clearing session. Specially fail to attend the return session.
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Figure 6.7.1: BACPS Eligible Item Identification
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Digital Signature
The use of the Public Key Infrastructure (PKI) ensures data authenticity, integrity and no
repudiation, adding strength to the entire system. The image and data becomes secured using the
PKI throughout the entire transmission cycle between the presenting bank, the clearing house
and the paying bank. It is of the bank to ensure that the movements of electronic files from their
host capturing systems to the PBM are secured with the highest levels. Access to the bank’s
PBM must be limited to authorized personnel only.
Inward clearing in Exim Bank Bangladesh Limited

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 Receives clearing instruments from system
 Verifies clearing stamp, crossing, endorsement etc.
 Debiting respective account
 Ensures honor or dishonor in the system
 Corresponding with main branch (if necessary)
Time Durations for Inward Clearing:
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Cutting Time A/C Debit
Regular Clearing 12:00pm 4:30pm
High Value Clearing 11:30am 2:30pm
Table no. 6.9.1: Time durations for inward clearing
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Bank faces confirmation problem at the time of payment of inward cheque. It must be confirmed
about inward cheque before payment.
Outward clearing in Exim Bank Bangladesh Limited
 Receives clearing instrument form the clients

 Crediting the same in respective account
 Prepares instruments of clearing
 Scanning & transfer to the system
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Time Durations for Outward Clearing:
Cutting Time A/C Credit
Regular Clearing 12pm 5:30pm
High Value Clearing 11:30am 3:30pm
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Table no. 6.10.1: Time durations for outward clearing
Collection Procedure for Clearing in Exim Bank Bangladesh Limited
 The Cheque is first deposited through a received seal with the help of a slip.
 The collection bank gives a crossing with EXIM Bank Bangladesh Limited Limited. It
indicates that the mentioned bank is the collection bank.
 Entry for outward clearing to the register is given with a clearing seal and giving the
cheque a subsidiary seal.
 The Cheque is then sent to EXIM Bank Bangladesh Limited Limited, local office along
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with other cheque. Three sets of voucher are prepared for this purpose.
 If the cheque is on other branches of EXIM Bank Bangladesh Limited Limited with in
some clearing area then it was collected through inward clearing house of EXIM Bank
Bangladesh Limited Limited.
Bank maintains duplicate print for security. Scrutiny of high value transactions, limit based
checking by officials system is established.
Settlement
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Settlements are made on the basis of the electronic cheque data including the amount that
accompanies the image and that are contained in cheque return data. The specifications that
qualify cheques for image based clearing must strictly be followed. Sometimes Bank faces
excess claim and fewer claims problems.
Cancelation of ACH in Exim Bank Bangladesh Limited
To cancel an Automated Clearing House (ACH) payment customer needs an authorized a third
party to perform it from customer’s savings account, who first calls the Customer Relationship
Center and supply client information to the representatives. This will allow Bank’s representative
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to put a temporary hold on the transaction. Next they submit the Written Statement of
Unauthorized Debit Automated Clearing House (ACH) Transaction – Consumer (ACH Stop
Payment Form) form.
Statistics of BACH Transaction Processed OF EXIM Bank BD During June,

2019 to July, 2019
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Date Outward Inward total Branch Commen Weakly Comment
total position t position
6/3/2019 7464514 19207043.67 -11742529.67 Negetive
6/9/2019 9170950 13036857.5 -3865907.5 Negetive
6/10/2019 11388993.89 22004000 -10615006.11 Negetive -133711827.1 Negetive
6/11/2019 13530459.11 7455060 6075399.11 Positive
6/12/2019 22995658 17262802 5732856 Positive
6/13/2019 5929562 212779404 -206849842 Negetive
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6/16/2019 27468637.2 23581605 3887032.2 Positive
6/17/2019 64676353.5 6169438.5 58506915 Positive -165442247.4 Negetive
6/18/2019 11174500 30239990 -19065490 Negetive
6/19/2019 9655279 11576141.61 -1920862.61 Negetive
6/20/2019 12925611.88 3800436 9125175.88 Positive
6/23/2019 12798586.74 23868941.5 -11070354.76 Negetive
6/24/2019 46695796.61 12395324.5 34300472.11 Positive 31317354.71 Positive
6/26/2019 31820611 34281631.48 -2461020.48 Negetive
6/27/2019 9976000 8552918.04 1423081.96 Positive
6/30/2019 28197724.65 9348987.02 18848737.63 Positive
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7/2/2019 16349207.21 11562784.5 4786422.71 Positive
7/4/2019 51654379.87 8698204 42956175.87 Positive 59457125.96 Positive
7/15/2019 14433710.25 21978706.5 -7544996.25 Negetive
7/16/2019 16949266 16538480 410786 Positive
7/17/2019 2412432 18391820.91 -15979388.91 Negetive
7/18/2019 3294674 58536028.5 -55241354.5 Negetive
7/21/2019 30430530 20875961.41 9554568.59 Positive -8536495.04 Negetive
7/22/2019 54458379.28 10642785.5 43815593.78 Positive
7/23/2019 30912846 21598760 9314086 Positive
7/28/2019 2759097.1 65053808.74 -62294711.64 Negetive
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7/29/2019 3974696 13638895.5 -9664199.5 Negetive -36092377.14 Negetive
7/30/2019 41577470 9122591 32454879 Positive
7/31/2019 17863492 14451837 3411655 Positive
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250000000
200000000
150000000
100000000
50000000
Outward total
0 Inward total
19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 Branch position
-50000000/20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20 /20
3 0 2 6 8 0 4 7 2 5 7 1 3 9 1
6/ /1 6/1 6/1 6/1 6/2 6/2 6/2 7/ 7/1 7/1 7/2 7/2 7/2 7/3
-100000000 6 Page | 166
-150000000
-200000000
-250000000
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100000000
50000000
0
6/10/2019 6/17/2019 6/24/2019 7/4/2019
-50000000 Weakly position

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-100000000
-150000000
-200000000
Chapter- 7: SWOT Analysis
Exim Bank Bangladesh Limited is a successful bank in its sector but it has some drawbacks, and
hopes overcome these for the betterment and can flourish themselves. Following is a SWOT
analysis-
Strengths
 Whole system is highly secured

 Settlement is made through wave
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 Online version of the clearing process enables to work at any workstation in banks
 Physical movement of officers is not required
 Strong initiative to explore investment opportunity through Research and Marketing
 Strong IT & E-Banking Status do not match with other banks
Weaknesses
 Fails to attend the clearing session sometimes

 Especially fails to attend the return session
 Material alternation in MICR line creates problems
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 Only black & white image is captured
Opportunities
 Can increase awareness of Banking System

 Increase customer reliability and satisfaction
 Use UV detector before presenting and printing instruments with erasable UV link
 Positive Pay instruction and new account alert system
 A monitoring dashboard presenting information to the top management about the
total number of cheques cleared, each hour
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 Management can identify the peak business days of the year and thus allocate human
resources accordingly
Threats
 Occur excess claims and fewer claims

 Material alternation in numeric amount and word figure
 Material alternation in instrument no.
 Material alternation in MICR encoded line
 Bank maintains duplicate print
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Chapter- 8: Findings of the Study
The following findings emerge from the analysis:
1. Images of clearing instruments are considered for clearing process. Settlement

made through wave where physical movement of officers not required. Branches
and staffs are in less risk for the transportation of cheques and transfer orders.
BACH and BEFTN reduce branch’s clearing to one day from three to four days.
The transportation cost per request has been decreasing upto 80%. After
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integration with the core banking solution, the verification will be in 3 seconds
which is now in about 10 seconds. Day end operation confirms that the
information about all the cheques is processed and no cheques are left unattended.
Post dated cheques processing enables the user and stuffs to input the late dated
cheques for effective use of time.
2. Excess claims and fewer claims both occur in the bank.

3. The Whole system is highly secured but some fraudulent attempts have found on
missing the BACPS System.
4. Failure to attend the clearing session occurs, especially failure to attend the return
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sessions.
5. Material alternation in the amount of numeric and word figure causes problems.
6. Material alternation in instrument no. creates mismatch with the records.
7. Material alternation in MICR encoded line sometimes causes deficiencies.
8. Material alternation in MICR line creates problems.
9. Bank maintains duplicate print.
10. Only black & white image is captured. There is no color image system in this
Bank.
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Chapter-9: Recommendations and Conclusion
Recommendations
EXIM Bank Bangladesh Limited is undoubtedly a successful bank, but there are some
limitations in BACH Operating Procedure and Settlement. If the limitations are eliminated the
bank will become more successful than as it is at present. Considering them, I would like to
recommend the following steps to lessen its limitations-
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1. A monitoring dashboard presents information to the top management about the total
number of cheques cleared in every hour. Management can identify the peak business
days of year and thus allocate human resources accordingly and may get more customer
satisfaction.
2. EXIM Bank Bangladesh Limited should take proper steps to check genuineness of the
cheque leaf. Scrutiny of high value transactions, limit based checking by officials system
established.
3. EXIM Bank Bangladesh Limited should take attempt to detect any fraudulent activity,
forgery or tampering by verify the prima facie genuineness of the cheque. It could be
ensured that each cheque is verified by UV detector before presenting.
Page | 177
4. They should take care about the instruments, that they are printed with erasable UV link.
5. The Bank could certify that the presented item is a copy of the original instrument.
6. Inward cheque payment could be done with confirmation for more safety.
7. Positive Pay instruction and new account alert system should be present at the bank.
8. KYC update and monitoring system should be properly maintained by the bank. A new
group of IT skilled people can be recruited to fasten the digital banking roadmap journey.
9. For secured operation, two image segments should be captured in colored.
10. They should use more updated versions of software for their day to day activities.
I hope and believe that, if the recommendations cited above are accepted by EXIM Bank
Page | 178
Bangladesh Limited; they will be able to establish themselves as one of the best practicing bank
in Bangladesh at near future.
Page | 179
Concluding Remarks
Exim Bank Bangladesh Limited is a new generation Bank in the private banking sector of
Bangladesh with a promise to fulfill every possible customer needs with high efficiency and
satisfaction. Its team of dedicated professionals is committed to provide an unparalleled service
by using the latest technology to make bank able to harvest the maximum benefits for the
customers, and the society at large. At present BACH operation all the clearing instruments have
been standardized and most of the banking transfer is done by BEFTN as it is easy to manage
and takes less effort. After BEFTN completion the team started to work in the online version of
the DMS Imago solution. Now, all the branches are empowered with DMS-Imago, BEFTN and
Page | 180
Web version of clearing. BACH and BEFTN have reduced the branch’s clearing time to one day
from three-four days and reduced transportation cost upto 80%. By taking attempt to detect any
fraud, forgery or tampering, KYC update and monitoring, verifying every cheque by UV detector
before present and instrument print with erasable UV link EXIM Bank Bangladesh Limited can
extend and expand its BACH operations.
From Exim Bank Bangladesh Limited, I have gained practical knowledge which will help me
to relate my theoretical knowledge with the real life work experiences. These experiences of
sharing works with such working environment will help me in a professional life. For that, I am
really grateful to University of Development Alternative and Exim Bank Bangladesh
Page | 181
Limited, Satmosjid Road Branch.
Page | 182
References
11. Ahmed, Feroz and Islam, Md.Tarikul (2008). “E-Banking: Performance, Problems and
Potentials in Bangladesh”,
12. Ahmed, Nafid Imran (2010). “Encashing mobile remittance”, The Daily Star, April, 15.
13. Ahsan, AFM Mainul (2009). “E-commerce in Bangladesh”, The Financial Express,
Bangladesh, January 12
Page | 183
14. Ali, Muhammad Mahboob (2003). “E-Business in the age of Globalization: Bangladesh
perspective”, The BangladeshBanking, Vol. 6, No. 1 & 2.
15. Business Review, Vol. 06, No. 1&2, January to December.
16. Huda, Shakil, Momen, Mohammad Abdul, Ahmed, Mushtaque (2004). “On Line
Banking System”, Finance and Observer, September, 13.
17. Rahman, Atiur (2010). “Digital Bangladesh Bank”, The Daily Star, January, 13.
18. Website of Exim Bank Bangladesh Limited.
19. Daily affairs of Exim Bank Bangladesh Limited.
Page | 184
20. http://thedailynewnation.com/news/72170/introducing-an-efficient-national-payment-
system.html
21. http://businessnews-bd.com/bangladesh-updating-payment-system-to-boost-financial-
inclusion/
Page | 185

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INTERNSHIP REPORT

An Evaluation of Bangladesh Automated Clearing House System on

Siddique Hayat Khan,

University of Development Alternative

December 14, 2019.

University of Development Alternative

Mehethe Hasan Sajjad

University of Development Alternative

I am using this opportunity to express my gratitude to everyone who supported me during my

University of Development Alternative

University of Development Alternative

University of Development Alternative

5.3 Comparison between Manual and Automated Clearing System 21

6.10.1 Time limitations for outward clearing 26

4.6.1 EFT Credit Transaction Flow 14

4.6.2 EFT Debit Transaction Flow 14

5.1 Comparison between BACH and Traditional clearing system 22

5.2 Comparison between BACH and Traditional clearing system 23

6.4.1 Image of Cheque Scanner 23

Scope of the Study

Source of Data Collection:

 Annual reports of EXIM Bank of Bangladesh Limited

Limitations of the Study

Bangladesh Automated Cheque Processing Systems (BACPS) is the electronic cheque

Export Import Bank of Bangladesh Limited at a Glance

Vision Statement of Export Import Bank of Bangladesh Limited

Mission Statement of Export Import Bank of Bangladesh Limited

 Providing with quality financial services especially in Foreign Trade.

 Maintaining and upgrading a technology-based professional banking environment.

 Maintenance of corporate and business ethics and transparency at all levels.

 Sound capital Base

 Fulfillment of corporate social commitments, and

 above all, to add to the national economy

Organizational culture is considered as an essential component of business corporations as it has

Pay Order (PO)

BACH System in Exim Bank Bangladesh Limited

Types of Clearing Instruments

 Cheques (CD, SB, Loan)

BACH Operating Rules in Exim Bank Bangladesh Limited

a) Settlement made through wave

g) Outward clearing in Exim Bank Bangladesh Limited

The BACH components

The BACH has two components:

Eligible Instruments for BACPS

1 Savings Bank 10 2 Current Account 11

3 Refund Warrant 18 4 Banker’s Cheque 12

7 Govt. Cheque 31, 32 8 Dividend Warrant 14

9 Credit Card Cheque 20 10 Demand Draft 15

13 Fractional Dividend 15 14 Interest Warrant 17

c) Bangladesh Electronic Funds Transfer Network (BEFTN)

d) Receiving Bank (RB)

A receiver is a person or an organization who has the authority as an Originator to transmit an

Settlement and Posting

BACPS Operating Procedures

Presentment Return Settlement

Regular Clearing 13:00 hrs 18:00 hrs 18:01 hrs

High Value Clearing 12:00 hrs 14:00 hrs 14:01 hrs

House (BACH) authority from time to time.

Responsibilities of Presenting Bank