Inter-Province Cheque Clearing System is the clearing procedure for cheque, draft, bill of exchange, and promissory note in case that a collecting branch and a paying branch are located in different clearing areas.
The collecting bank has two alternatives of sending B/C for funds collection
First method: The collecting bank sends cheques to its branch that is located within the same clearing house as the paying bank. The cheques then enter one-day clearing. Once the B/C results are known, the agent branch then notifies the original branch that called for collection.
Second method: Generally used when the collecting bank does not have a branch within the same clearing center as the paying bank, here the collecting bank sends the cheques through to the paying bank’s headquarter via ECH, who calculates the net clearing positions for the member banks. The paying bank notifies its counterparty, the collecting bank, of the B/C results, and record the information for ECH, who then carries out interbank settlement via BAHTNET.
Both methods, according to an agreement reached among member banks, should take no more than 15 working days. With the new BOT regulation introduced, both methods must take no more than 6 working days. As for the development to improve system efficiency and achieve one-day clearing, this depends on the member banks’ readiness with regards to acquiring the on-line signature authentication technology necessary in order that bank branches throughout the country would be able to authorize cheques on-line. BOT is in the process of establishing working plans that are appropriate for the new technologies.
Present, collecting banks can operate the bills for collection in two ways:
1. Collection through the provincial clearing house of the paying bank's area. With this method, a collecting branch transports cheques to another branch, which is located in the same clearing area as the paying branch. The collecting branch must complete the clearing process within 5 working days next to the date of deposit.
2. Collection through the headquarter in Bangkok. A cheque deposited in Bangkok can be cleared via the clearing system that can complete the process within 3 working days starting from the date that the physical cheque is exchanged. Due to its clearing duration, this clearing system is called "B/C-3D".
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2. Regulations, Guidelines, and Policies |
The BOT has issued The Bank of Thailand Regulation on Inter – Provincial Cheque Collection B.E. 2546 as amended in B.E 2548, 2550. The regulation determined BOT' s authorities and responsibilities for settlement service. In addition, it determines the member banks' responsibilities to perform the process according to The Bank of Thailand Notification on principles, procedures and time period for settlement.
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3. Participants in the System |
There are 2 kinds of members: A direct member refers to a bank that operates both collecting and paying functions. Moreover, the bank must be able to operate paying function in all regional areas as determined by BOT. A direct member can receive collection fees. An indirect member refers to a bank that operates the collecting function, but does not have branches to operate the paying function in all regional areas as determined by BOT. An indirect member will not receive any collection fees.
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4. Operational Procedures |
A major branch of a collecting bank submits cheques through the clearing house for its collecting branches and a major branch of a paying bank verifies the cheque for its account-holding branch.
Normal Round
The headquarter of the collecting bank prepares out-clearing cheque data in the format complied with the BOT standard and submits the data to the Electronic Clearing House (ECH) via the Electronic Financial Services (EFS). ECH then calculates net clearing position and generates in-clearing data. Physical cheques are sorted by bank and exchanged at the ECH.
Return Round Clearing
Once cheques are exchanged at the ECH, the paying bank verifies those cheques by validating completeness of the physical cheque, verifying payer's signature, and debits customer's account in 1-2 days. Returned cheque data and physical cheques must be submitted back to the collecting bank in 3 working days.
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5. Processing and Equipment |
Microcomputers with printers, SMART Card Reader and card reader. Linkage and transmit message via BOT WEB PORTAL through Electronic Financial Service (EFS) provided by BOT.
The B/C – 3D clearing position is settled at 1:00 p.m. of day 3 via BAHTNET. The position equals to the clearing position in day 1 minus the position of the returned cheque in day 3. The sending bank credits the customer’s account after the returned round.
ECH is a non-profit operation. For processing B/C – 3D transactions, the sending bank would be changed Baht 0.60 per cheque.
Interbank fees are allocated to collecting and paying banks. However, the allocation ratio is currently determined as 100:0 for collecting and paying banks respectively. Thailand Banker Association will revise the appropriate ratio later.
Commercial banks that provide provincial cheque services set fees based on standard rates of the Thai Bankers' Association, which is 10 baht per each 10,000 baht with the minimum of 10 baht, which is calculated on the face amount of the cheque.
BOT has drawn up contingency plans depend on the level of serious situation of member bank side and Electronic Clearing House side as follows:
1. In the event that a member bank cannot send the clearing data to the Electronic Clearing House (ECH) via EFS, a member bank is able to switch to use other means of communication to send the clearing data.
2. In the event that BOT Web Station of a member bank fails, the member bank brings the clearing data to ECH in order to send the clearing data via BOT Web Station at ECH.
3. In the event that the member bank’s system, prepared the clearing data, fails, use the B/C Stand alone at ECH instead.
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