What is Interbank Electronic Payment System How is the business done?

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Nepal Clearing House Limited is a public company under Nepal Rastra Bank. V.S. The company was established on December 26, 2008. It has the equal participation of Nepal Rastra Bank, Commercial Bank, Development Bank, Finance and Smart Choice Technologies (SCT).The company provides a technology-oriented service to provide a convenient financial solution for consumers by improving the efficiency and productivity of banking and financial services. The company offers the facility to pay bills directly through technology without spending on various infrastructure of the bank.

The Interbank Electronic Payment System (NCHL-IPS) is a payment technology operated for the management of transactions and remittances made by the customers in the member banks and financial institutions affiliated to the Nepal Clearing House. From the company’s electronic payment system, customers will be able to make payments to another bank account online or by filling out a form at a bank.

So far, 60 banks and financial institutions have entered into agreements in this system as direct members and three remittance companies as indirect members. All the Class A banks have joined this system which came into operation from last August 1. The clearing house is also in the process of concluding agreements with other development banks and finance companies to provide the system.

What are the facilities?

Through the interbank electronic payment system, the member banks and financial institutions affiliated with the company will be able to conduct transactions such as making and receiving payments in any of the accounts of the customers. The member banks and financial institutions will be able to provide and receive any type of payment services such as customer transfer, dividend payment, IPO refund, bill payment, premium payment, social security allowance, pension payment, remittance.Arrangements have been made to implement such transactions in the system in a phased manner. Transactions through the system will be transparent, maximum number of transactions can be done easily, risk reduction and modern payment services based on international standard technology will be provided to the customers. At present, there is a provision to trade foreign currency including Nepali Rupee.

How is interbank electronic payment made?

In this system transactions are done on the basis of the instruction of the paying customer or the instruction of the receiving customer. After the paying customer has instructed or authorized the bank having his account to make the payment in the account of other member banks and financial institutions affiliated to this system, the paying customer’s bank will send the instruction to the receiving customer’s bank through NCHL-IPS.The bank of the receiving customer deposits the amount as per the instructions in the customer’s account after receiving the transaction instructions from Nepal Rastra Bank within the stipulated time interval. Transactions made on NCHL-IPS based on the instructions given by the paying customer to their bank are called direct credit transactions. The paying customer can give such instruction through the branch of the bank where he has his account or any other means provided by the bank.

Similarly, the customer’s bank sends instructions to the paying customer’s bank through NCHL-IPS on the basis of the approval given by the customer making the payment to the account holder within a specified time interval.After receiving the instruction of the transaction, the bank of the paying customer spends on the account of the customer and the bank deposits the amount as per the instruction in the account of the customer receiving the payment after receiving the information about the final disbursement and change from Nepal Rastra Bank. The transaction made on NCHL-IPS is called direct debit based on the instructions given to the bank by the customer taking such payment.

How to get the service?

For interbank electronic payment transactions, the customer has to provide the bank account details, type of transaction, amount, etc. of both the parties taking and giving payment in their bank. However, the bank concerned may request further information if any other details are required to conduct the transaction.

Arrangements have been made for the branches of banks and financial institutions affiliated to NCHL-IPS to resume the transactions submitted to the system within one o’clock in the afternoon on the same day and the transactions submitted after one o’clock on the next working day. However, since banks can set internal time limits as per their arrangement, the customer has to contact the bank and financial institution where he has his account for the schedule of submission of transactions.

The customer will be charged a normal fee for every transaction made through this system. This fee will be levied on one of the paying or receiving parties depending on the type of transaction. Customers should contact the bank and financial institution where they have their account for more information about the service charges.

Creditor list and its function

The process of listing in this system all the details of the bank account required to complete the transactions of the paying customer is called creditor listing. The listed creditor is thus given a separate credit code from NCHL-IPS. If the paying customer mentions their bank in the said code, the required details of the customer receiving payment for the transaction will be automatically reflected in the system, so there is no need to leave out all the details of the receiving customer.

Small and medium enterprises such as schools, colleges, and the Internet, which have a large number of customers and need to collect payments regularly, can simplify and collect their payments by listing their bank accounts and providing credit cards to their customers. Creditor listing can be done through the bank and financial institution having your account.

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