Commercial
Banks in Pakistan hold accounts at the State Bank of Pakistan
to perform settlement amongst them as well as to meet certain
regulatory requirements.
Each
Bank holding account at SBP is issued with a paper cheque-book
which is used to withdraw/transfer funds from its account. The
paper cheques are presented physically at SBP counters until 1:30
pm each day by Commercial Banks' treasuries to settle their payment
obligations against other banks. SBP then passes the necessary
journal entries to debit the remitting bank and credit the beneficiary
bank and completes the activity by the end of day. SBP is the
final settlement agent for the large value interbank market, govt
securities market and the eventual net settlement of the retail
cheque system. Thus the type of settlements taking place at SBP
is vital to the smooth functioning of the financial system.
The
existing system is based on manual book keeping procedures which
is not only inefficient but also prone to various types of risk
affecting the overall efficacy of the banking system.
State
Bank of Pakistan (SBP) is now in the process of introducing a
Real-Time Gross Settlement (RTGS) system for large value payments
in the interbank market whereby Banks holding accounts at SBP
would be able to operate their accounts in real time from their
own premises via computerized network between SBP and the participating
Banks. Under the new arrangements Banks would be able to settle
their transactions affecting their accounts at SBP (e.g. interbank
lending/borrowing) immediately after the terms of the transaction
have been agreed and executed between the Banks. The ability to
make the final settlement of funds in real time would necessitate
that the Bank sending a debit instruction must have sufficient
balance available in its account before the funds transfer takes
place. In other words the account can not go into negative at
any time during the day.
At
times Banks may be facing temporary shortage in their account
creating need for a mechanism to obtain liquidity for a short
period during the day i.e. intraday liquidity. This need is usually
catered for by the Central Bank through availability of intraday
repos, collateralized lending etc. In case the Bank is unable
to replenish its account with the required liquidity, the transaction
is queued in the system until the required liquidity becomes available.
CMA
Small System AB of Sweden is implementing RTGS at State Bank of
Pakistan
Reference:
http://www.cma.se/companies/companies_IT.html