IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 5 NO. 2 2019

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Automated Clearing System as an Effective Payment Platform

Nordiana Osagie Davies, Imo Casmir Chibuzo

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Abstract

This study examined the effectiveness of Automated Clearing System on the Nigerian Payment System. It highlights the adoption of an electronic based banking environment as a landmark in the re-engineering of banking sector and a clear gradual departure from the manual operational based transactions. The study covers cheque clearing processes (through the application of NBCS Cheque Truncation Model) which has facilitated efficient transfer of funds and enhanced the cashless policy of the Central Bank of Nigeria. Data were elicited using a stratified random sampling technique from current account holders and staff of three major banks in Nigeria. Interviews were also conducted on various funds transfer staff of the selected banks. Chi-square analysis was used to probe the association between the bank staff and account holders’ responses. The study revealed that there is a significant agreement from the reports of the clearing staff and the customers of the banks. The study further lend support that there is a significant reduction in the length of time to complete a clearing cycle from T+3 to T+1 while the time of cheque return was reduced fromT+1 to T. The study however recommended that a routine reconciliation of clearing transactions be carried out while contingency arrangements be made for continued operations in terms of ‘downtimes’. Continuous re-training and capacity enhancement of bank staff was also recommended for the automated clearing system to achieve its desired objectives.

keywords:

Automation, Cheque Truncation Model, Clearing, Interbank, NEFT, Nigeria Bankers Clearing System.

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