This document discusses clearing processes between banks in Pakistan. It provides information on Askari Bank and defines inward and outward clearing. Inward clearing means cheques received by a bank from other banks, while outward clearing means cheques sent for collection to other banks. The document outlines the different types of clearing cycles including normal, same day, special and intercity clearing. It also discusses the role of NIFT in facilitating automated clearing between banks in Pakistan.

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

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

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

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

7. Inward clearing
Outward clearing

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

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

10. “Outward clearing means cheques sent for
collection”

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

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

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

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

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

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

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

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

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

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

30. Crossing stamps
Clearing stamps
Date(which should be current)
Endorsement stamp on back side
Amount in figures & words should be matched
Signature verification
Transfer Stamp

39. NORMAL CLEARING CYCLE

40. SAME DAY CLEARING CYCLE

41. SPECIAL CLEARING CYCLE

42. INTERCITY CLEARING CYCLE

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

44. Short cycle
Responsive
Safety
Simplicity