Electronic Clearing System (ECS)

Electronic Clearing System (ECS)

Table of ContentsIntroduction

Slide 2

Introduction  Business Scenario  Finacle CBS Process Overview  Key Terminologies  Step by Step Process  Demonstration  Summary

Electronic Clearing System (ECS) Slide 3

Introduction

Lesson Objective

Duration

Intended Audience

To understand the process of Electronics Clearing system in Finacle CBS

1 Hour

Customer Service

Electronic Clearing System (ECS) Slide 4

Business Scenario

A Customer of your SO approaches you to debit his account for a fixed amount every month and credit the same to a State Bank of India account within the city. How will you register the customers mandate in Finacle CBS?

Let us see the generic process in detail for Outward ECS.

Electronic Clearing System (ECS) Slide 5

Finacle Process Overview (Contd…)

Various types of mandates for ECS processing through Finacle

Electronic Clearing System (ECS) Slide 6

Key Terminologies

TERMSS DESCRIPTIONS1 Payment system

 It is the mechanism for the transfer of monetary value and related information between banks for bank’s customers and / or financial institutions. Payment systems can be cash, paper based, plastics or electronic. Electronic payment systems comprise of ECS, SWIFT and so on.

2 ECS-Electronic Clearing System

 

This is a process through which settlement takes place between various Banks involved in the process as a part of Finacle Payment System capability. 

3 Real Time Processing 

Real time processing indicates a process through which the settlement takes place at each transaction level by means of message forwarding. 

4 Bulk Processing 

In case of bulk processing all transactions would be consolidated at the day end/after a cut off time and when the settlement is done. 

5 Sponsor Bank 

The Bank which, initiates / originates messages for either Receipt or Payment on behalf of its customers. 

6 Destination Bank 

Destination Bank is a Bank which receives such messages for responding and completion of the process. 

7 Outward Processing 

All transactions which are originated by Sponsor Bank either Receipt or Payment is an Outward Processing. 

8 Inward Processing 

All messages received by Destination Bank and processed can be referred to as Inward Processing.  

Electronic Clearing System (ECS) Slide 7

Key Terminologies (Contd…)

TERMS DESCRIPTIONS9 User Account

 Beneficiary’s account with Sponsor bank

10 Destination Account 

The ultimate beneficiary at the Destination Bank

11 Clearing House/Agency 

It is the central agency, which facilitates the ECS processing

12 Settlement Date 

It is the date on which the accounts are affected both at the sponsor bank and destination bank with the help of Clearing House/Agency.  

13 Service SOL 

This is a SOL which represents all branches of a Bank in a particular Center. The branches would be linked to an identified SOL for settlement with other Banks and this will be the Nodal/Focal point of reference to all other Banks 

14 Mandate It is an instruction given to the Bank by the customer for either sending of receiving Debit or Credit messages

15 ECS Reference Code 

This code is used to identify the type of Payment system. This is the first step towards defining a Payment System in Finacle

16 ECS Transaction Code 

This code is used to identify the type of transaction. For each type of transaction a code could be created

17 Over the Counter Transaction

Transactions either in cash or for the debit of a customer account where ECS is not enabled at account level and not a routine transfer. The Customer may or may not have account with the sponsor bank for performing such transactions.

Electronic Clearing System (ECS) Slide 8

 FEATURES OF ELECTRONICS CLEARING SYSTEM

This  is  the process through which settlement takes place between post office and Banks  involved  in the process  as  a  part  of  FInacle  Payment  system  capabilities,  supports  settlements  without  physical instruments

ECS support both Inward and Outward transaction processing A customer can give a mandate for credit of Term deposit interest or maturity proceeds. The instruction 

can be for payment of loan installment obtained at another bank. The instruction can be for receiving loan payment from another Bank, it can be for crediting of loan disbursement for an accounts it supports over the counter transactions.

ECS  is convenient for both the sponsor bank/PO (refers to the PO/bank which  initiates or originates the messages for either receipt or payment on behalf of its customer) and the destination Bank/PO (is a bank which  receives  messages  for  responding  and  completion  of  the  process  in  settlement  of  customer transaction. Sponsor Bank refers to the Bank, which acts as an agent to its customer and submits the ECS data to the clearing agency on their behalf. The destination Bank refers to the bank where the beneficiary holds the account.

Facilitates collection of charges from customers through ECS. The  data  is  processed  at  the  Service  branch  level  on  behalf  of  all  the  branches  attached  to  the  service 

branch.

This  is  the process through which settlement takes place between post office and Banks  involved  in the process  as  a  part  of  FInacle  Payment  system  capabilities,  supports  settlements  without  physical instruments

ECS support both Inward and Outward transaction processing A customer can give a mandate for credit of Term deposit interest or maturity proceeds. The instruction 

can be for payment of loan installment obtained at another bank. The instruction can be for receiving loan payment from another Bank, it can be for crediting of loan disbursement for an accounts it supports over the counter transactions.

ECS  is convenient for both the sponsor bank/PO (refers to the PO/bank which  initiates or originates the messages for either receipt or payment on behalf of its customer) and the destination Bank/PO (is a bank which  receives  messages  for  responding  and  completion  of  the  process  in  settlement  of  customer transaction. Sponsor Bank refers to the Bank, which acts as an agent to its customer and submits the ECS data to the clearing agency on their behalf. The destination Bank refers to the bank where the beneficiary holds the account.

Facilitates collection of charges from customers through ECS. The  data  is  processed  at  the  Service  branch  level  on  behalf  of  all  the  branches  attached  to  the  service 

branch.

Electronic Clearing System (ECS) Slide 9

Step by Step Process

Given below is the step by step process to perform electronic clearing in Finacle:

Enable the facility of ECS for the customers at the time of account opening from the menu option, SB- CASBAO/QDESA, RD –CRDOAAC/RDAOCM, TD/MIS – CMISAOP/MISAO , SCSS- CSCAOP/SCSSAO

Enable the facility of ECS for the existing customer through the menu option SB – CASBAM/QDEMSA, MIS/TD – CMISAM/MISAMAV, RD - CRDACM/RDAMM, SCSS - CSCAM/SCSSMAV

Run the required batch jobs through centralized operations for creation of upload data files and download data files for inward clearing electronically

Invoke the menu option HECSM (ECS Mandate Maintenance) to set a mandate for customer accounts for Outward transactions in ECS.

Electronic Clearing System (ECS) Slide 10

Demonstration

Electronic Clearing System (ECS) Slide 11

Congratulations!! You have successfully completed the lesson Electronic Clearing System using Finacle. Following are the summary of important points discussed in this lesson:

Maintaining Service Branch Member by invoking menu option “HSBM” and for uploading Service Branch member “HSBMU”Finacle supports issue of ECS (Electronic Clearing System).  ECS can be enabled at the time of opening for new customers from the menu options:

— SB- CASBAO/QDESA, RD –CRDOAAC/RDAOCM, TD/MIS – CMISAOP/MISAO , SCSS- CSCAOP/SCSSAO

Enabling ECS facility for the existing customers— SB – CASBAM/QDEMSA, MIS/TD – CMISAM/MISAMAV, RD -

CRDACM/RDAMM, SCSS - CSCAM/SCSSMAVInvoke HECSM menu to set up the customer mandate for ECS (Electronic Clearing System).Two types of Electronic Clearing System are Inward and Outward.  Run the required batch jobs for outward and inward files (data center/CPC activity) This the EOD process.

HOTCE menu should be invoked for Over the Counter Transaction on ECS

The process at the Service Head Office for uploading and downloading of the files to be sent to Clearing House.

The Menu Option for different processes at Service branch are :- HEGOC,HEOTP,HEOSR,HEORP,HEITU,HEIRP,HEGIR

Summary

Electronic Clearing System (ECS) Slide 12

Annexure

Additional details for User Champions program

Accounting entries examples and menu options used to run the batch jobs and media file generation.

Additional details for User Champions program

Accounting entries examples and menu options used to run the batch jobs and media file generation.

Electronic Clearing System (ECS) Slide 13

Outward Credit Transactions

Given below are the account entries for Loan disbursement/SI/TD outward credit transaction:

Debit Credit RemarksHLADDRSIEACINT & debit TDHOTCE

Other suspense account

On day 1

Download data - EGOC

On settlement day Run EOSR

Other suspense Settlement account Run EOSR

In case of rejections, run EORP

Settlement account Other suspense In case of rejections

Electronic Clearing System (ECS) Slide 14

Outward Debit Transactions

Given below are the account entries for utility bills outward debit transaction:

Debit Credit RemarksSegregate data – our accounts and other bank accounts

EDS

Upload data – EITU for our customersUpload data – EOTP other bank customers followed by EGOC

Contra Contra Optional

On settlement day Run EOSR

Settlement accountContra

Customer accountContra

Run EOSRoptional

In case of rejections, run EORP

Settlement account Other suspense In case of rejectionsLift Lien ELL

Electronic Clearing System (ECS) Slide 15

Inward Credit Transactions

Given are the account entries for any credit received from other bank as an inward credit transaction:

Debit Credit RemarksUpload data – EITU

Settlement account Customer account On success

Settlement account

Other suspense On failure

In case of rejections, run EIRP

Other suspense Settlement account Generate inward reject file EGIR

Electronic Clearing System (ECS) Slide 16

Any Questions?