TABLE OF CONTENT
2.2 Historical background of Access Bank Pic 17
2 3 Meaning and Parties to Cheque as bill of Exchange 21
2.4 – The Terms of Clearing System in Nigeria Banking 23
2.5 Rules and Procedures of Clearing System 26
2.6 Problem and Challenges of Payment in Nigeria 27
2.7 Roles of Mega Ban in clearing house to deliver
cheque drawn on their bank. . 31
2.8 Types of clearing instrument • 32
2.9 Banker customer relationship in handling cheque 36
2.10 Management and membership of clearing house 38 CHAPTER THREE: RESEARCH METHODOLOGY
3 1 Restatement of the Research Question and
3 2 Research design and data collection instrument 41
3.3 Characteristics of study population and sampling42
3.4 Administration of data collection instrument 43
3.5 Procedure for processing collection 43
3.6 Limitation of the Methodology 46 CHAPTER FOUR: DATA PRESENTATION AND DATA ANALYSIS
Data Presentation and Data Analysis 47
Data Analysis 47
Sampling Techniques 62
Statements of hypothesis 62
Sample Design 63
CHAPTER FIVE: SUMMARY, CONCLUSION, RECOMMENDATIONS AND SUGGESTIONS FOR FURTHER STUDIES
5.1 Findings • 64
5.2 Conclusion 65
5 3 Summary 66
CHAPTER ONE 1.1
Cheque clearing system in an arrangement where by financial instruments issued by or to bank customers are presented and exchange so that the net position of member of the banks will be determined and given appropriately in line with existing rule of the land, regarding cheque clearing activities this is also the system by which indebtedness between commercial banks arising out of cheque drawn on them by their customers and paid into other bank is battled.
The settlement is drawn at clearing houses where there is a Central Bank of Nigeria (CBN) branch. During every working day, all commercial bank representative meet at CBN and there they exchange cheque drawn on them for cheque they receive from other banks. After the exchange of the collection of cheque the difference between the sum of all cheque received and taken are settled by the issuance of bankers payment.
The Nigeria automated clearing system (NACs), adopted a procedure which facilitates the automated clearing and processing of cheque on line (via computer} using a combination of NICR and imaging technology. The system enables cheque documents to be captured and processed at high speed with the uses of reader isorter machines and the state of the art computer technology.
The clearing, system: Cheques are paper items which are physical transferred between banks at same time as the electronic data is processed. Although the paying bank receives some of data electronically, the physical cheques themselves must also be transferred so that they can be examined by the paying bank for security and fraud prevention purpose.
Also the clearing system works within a three working day period (it does not operate on Saturdays, Sundays and bank holidays).
Day 1: When a cheque is paid into an account (at the collecting bank), it is sent to the banks clearing centre at the end of the working day
Day 2: All cneques received are sorted at the clearing centre and the sort code, account number and special number on the bottom of the cheque, together with the amount of the cheque are sent electronically to the banks on which they sve drawn (the paying bank) by 11am.
The physical cheque is then sent to the banks in which it is drawn.
Day 3: The paying bank debits the payers bank account they must pay each other on the basis of the value of all the cheques exchanged on the previous day.
A cheque may be returned later than day 5 if it is found to fraudulent.
1.2 STATEMENTS OF PROBLEMS
Banks may run into loss if communication link among their branches are not efficient. The couriers system must be highly functional now than ever before to avoid problems.
Most banks will be left out as participating bank clearing center (PBCC) as they may not able to meet the mandatory 1 billion deposits, such banks will be at the mercy of the participating bank clearing centre (PBCC).
Collecting bank would be fully liable if it pays the needs of a defective/forged instrument before maturity.
Presenting /collection bank may be the problem to the extent of any act of omission including contributory negligence that causes loss of funds through presentation of defective clearing instruments if it fails to caution the paying banks.
Paying bank may be liable where payment was countermanded that is debiting a cheque which is ought not to have been debited.
Paying bank may be liable for conversion that is paying a cheque to a wrong person.
1.3 RESEARCH QUESTION
Would cheque clearing assist in positioning of efficient settlement arrangement?
Would those banks not selected as participated bank clearing centre (PBCC) may lose some of its customers1′
Of what efficient is communication among branches through clearing system?
To what extent do you think efficient cheque clearing will ensure a shift away form cash base society?
1.4 OBJECTIVE OF THE STUDY
The aims and the objective of the study will include:
- To examine how cheques are cleared among banks in the economy
- To evaluate rules and performance of cheque clearing system in Nigeria.
- To highlight the benefit of the cheque system to individual organization and the government
- To foster a safe, stable and smooth functioning of banking system.
1.5 STATEMENT OF HYPOTHESIS
The general hypothesis that will be tested in course of this research work is as follow;
- Ho: Cheque clearing would not assist in positioning of
efficiency settlement arrangement. H1; Cheque clearing would assist in positioning of efficiency arrangement.
- Ho. Banks not selected as participated bank clearing center
, (PBCC) may lose some of its customers. H1. Banks not selected as participated bank clearing center (PBCC) may lose of its customers.
1.6 JUSTIFICATION OF THE STUDY
The system which feature on cheque clearing system in Nigeria banking shall be of immense significance not only to students of other higher institution and Polytechnics in particular in caring out their research work on activity of cheque clearing system to their studies.
The researcher carryout research on the question as decided alone can as well find issue of this work is of most advantages in carrying out their research above, customer and potential investor can find some reliance on the work of this study in casting their not in search and commitment of find in developing project of an environment.
Also, other contemporaries in the banking business and financial institution will have advantages of improving their activities after given the work of this survey well articulated recommendations.
Lastly, other organ izat!ons*^ft9agencies crowned with the responsibility of economic development of a given society shall be the effect of this survey assess and score their performance and belt up apparently on the area needed to satisfy the urgency in developing and making the economy availed one needed.
1.7 SCOPE AND LIMITATION OF THE STUDY
The research is about the cheque clearing system in Nigeria banks and the case studies is Access Bank Nigeria
Idris (1997) wrote on banker clearing system and notes and accounting procedures associated with banks clearing house computed figure inet debit and credit balances.
Ogoma (1996) wrote on problem and challenges of developing an efficient payment system in Nigeria where he emphasizes that one of his goals as the Central Bank of Nigeria (CBN) governor is to encourage the reformation and reorganization of clearing system to enhance it operational efficiency and effectiveness,
Lawahand Ojo (2002) defined the clearing system “as the functional process through which proceeds or settlement of cheque and other payment instrument are affected by paying bank (drawee) to the collecting bank (Paying’s bank).
Nnana and Ajayi (2002) states that in Nigeria, Central Bank of Nigeria (CBN) is taking a giant steps to ensure the smooth running of clearing system in accordance with provision of law. It has however, recognized the development of an automated clearing system is an essential and vital element in the development offlTiTbanking sector within the country.
Ajayi (2002) sees the clearing system as an arrangement which enable bank to exchange cheque on one another, it is process in which banks meet one banking day at specific hours to exchange payments instruments, particularly draft and cheque
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