banking system presentation

Overview Banking Cycle Process Flow at Branch Level Basic Features

Bank Products Account Features and Restrictions Transaction Set End of Day Batch Process Terminologies

Banking CycleStart of Banking Day

Open Branch

Process Transactions

End-of-day Balancing

Close Branch

Process Inward Check

End-of-day Batch Processing

End of Banking Day

Triggers the change of banking day

Over the Counter and Other Financial TransactionsNon-Financial Transactions Processing of Outward checks sent to Central Clearing

Tellers Total, Cash in Vault, Review of validation slips

Triggers the end of branch transactions Inward ReturnInward CheckReturned Check and Other Cash Items (RCOCI)Automatic Fund TransferService ChargingInterest Computation and PostingTD Accruals, etc.

Branch Delivery System

Deposit Management System

PROCESS FLOW (Branch Level)Open Branch

Financial TransactionsBack-Office and

Non-Financial Transactions

Late Check Processing

Cashier/Teller prepare for Financial Transactions

Teller PICOS In

Process Over the Counter Transactions

Teller Cash Transfer/Reques

t

Cashier/Teller End-of Day Balancing

Teller PICOS Out

Printing of Batch Reports

Post Back-office Transaction

GL Balancing

Process Non-Financial

Transactions

Process Outward Check

Send to Central Clearing

Turnover of Validation slip

Downloading of Data

Bkpr End-of-day Balancing

Close Branch

Current Account Non-interest bearing Checkbook-based

Savings Account Earns interest Passbook or ATM based

Time Deposit Interest bearing deposit, Interest rates vary

depending on the principal amount and term Supported by certificate issued by the bank Documentary stamp charge

Common Bank Product

Current Account Passbook-based Earns interest

Time Deposit Passbook-based Withdrawable interest One passbook with several placements

Automatic Transfer Arrangement

New Product Features

Account Features & RestrictionsJoint Account

• “OR” – an account opened by two or more person; ANY of the signatures is required.• “AND” – an account opened by two or more person; ALL of the signatures are required.

Payroll Account / Account with Waive Charge• No below maintaining charge

Tax Exempt Account• Interest credited to the account will not have withholding tax

Limited to Cash account • Only cash deposits and withdrawals are accepted by the bank until the client’s identity has been established

Transaction SetFINANCIAL TRANSACTIONS Cash Deposit

• Allows the client to deposit cash to an account. Amount deposited is available for withdrawal

Check Deposit• On-Us Check - checks drawn against the same bank• Off-Us Check - checks issued by an account holder of another bank(1) Local; (2)Regional; (3)Inter-regional; (4)Out of Town Checks

Withdrawal/Encashment• Allows the client to debit the transaction amount to his/her account as long as it is available

Debit /Credit Memo• Allows the bank personnel to debit or credit the transaction amount to an account without the use of cash or check

Fund Transfer• Pertains to a type of debit and credit that allows transfer of a desired amount from one account to another

Transaction SetTIME DEPOSIT TRANSACTIONS TD Placements

• Refers to the opening of time deposit account Pre-termination

• Withdrawal transaction made on the TD account prior to its maturity Redemption

• Withdrawal of the placement upon maturity Renewal

• A time deposit account that has matured and interest is paid out and the original principal is placed anew

Rollover• A time deposit that has matured and the interest forms part of the new principal

Maintenance of Interest Rate Bulletin• Update the interest rate based on term and principal amount

Transaction SetMISCELLANEOUS TRANSACTIONS RECEIPTS Bills Payment

• This process is offered to institutions or companies to accept over the counter collections/payments on their behalf.

Manager’s Check Issuance • Checks drawn by the bank upon itself negotiated within the locality

Demand Draft Issuance • Written order by a branch addressed to and made payable to another branch outside the locality of the issuing branch

Bank Charges • Fees for the services offered by the bank

Checkbook Reorder Counter check Bank Deposit Certification Safety Deposit Box Rental

Transaction Set Telegraphic Transfer

• Refers to remittances from one branch to another branch but the client do not have any account with the branch where the funds are to be sent

Misc. Receipt (Others) • Refers to other services offered by the bank which are not part of the above itemized transactions

PAYOUTS MC/DD Encashment

• Encashment of issued MC/DD Cash Disbursement

• refers to reimbursements and payments for expenses incurred by the bank

ForEx Buy/Sell

Transaction SetACCOUNT INQUIRY / MAINTENANCE Account Balance Inquiry Account Transaction Inquiry Check Inquiry Open Account

• Allows the user to input account details of a client who wishes to open an account. A unique account number will be given for each account opened

Customer Information File (CIF) Maintenance• Allows the user to create and maintain personal information of the client. Account cannot be opened without linking it to a client ID

Account Profile Maintenance• Allows the user to update account details such as account name, account features/restrictions, etc.

Close Account

Transaction SetACCOUNT INQUIRY / MAINTENANCE Float Maintenance

• Allows the user to increase/decrease or clear float days of a particular check deposited to the account

Place/Lift Hold• Allows the user to place/lift an account balance on hold; balance on hold cannot be withdrawn

Place/Lift Stop Payment Order (SPO)• Allows the user to place/lift SPO to a particular check; check with SPO status will not be processed.

Transaction SetOTHER TRANSACTIONS Passbook Issuance Checkbook Issuance ATA Enrollment

• A facility to define the source account(s) of an account with Automatic Transfer Agreement.

Teller Cash Transfer/Request• Cash Transfer to Vault• Cash Request from Vault• Teller to Teller Transfer• PICOS In• PICOS Out

Tellers Total Electronic Journal

Transaction Set

INCLEARING TRANSACTIONS Inward Return

• Handles the debiting of an account when a previously deposited check is returned by the drawee bank

Inward Check Processing • Manual Inward Check• PCHC Batch Processing

RCOCI Processing• Handles processing of accounts with insufficient balances or technically defective checks after posting of inward checks

RCOCI Maintenance• Pertains to processing of checks that are previously lodged to RCOCI.

Honored Check Returned Check

Dishonored Check due to DAUD/DAIF Dishonored Check Technically Defective SPO - DAUD/DAIF SPO – Funded Close Account

CONCEPT OF OUTWARD/INWARD CHECK

Bank1 client issue a check (5,000) to a Bank2 Client

Bank2 Client deposit the check to his Bank2 Account

At clearing cut-off, Bank2 collates all check deposits

Outward Checks (Bank2) will be sent to PCHC PCHC will segregate

and send checks to corresponding banks

Inward Checks (Bank1) sent by PCHC

Inward Check Processing

Check amount will be debited to the account

balance

Inward Return?

YES

End of Process, check will not be returned

NO

Bank1 will contact the client for RCOCI Disposition

Lodged to RCOCIHonor

Check?

Debit the check amount including honor charge to the account

YES

NO

Outward Checks (Bank1) will be sent to PCHC together with the Returned Checks

DAY 1

DAY 2

Sufficient Balance?

DAY 1 Outward Bank2

DAY 1 Inward Bank1

DAY 2 Outward Bank1

Inward Checks (Bank2) sent by PCHC

DAY 2 Inward Bank2

Debit check deposited

YES

NO

Day 3, check will be cleared

Transaction SetADMIN TRANSACTIONS Open/Close Branch Calendar Maintenance

• Tagging of banking holidays Bank/Branch Maintenance

• Define the branch details including Clearing cut-off time, transaction amount threshold for Anti-Money Laundering, Local Currency, etc.

Vault Management• Used by cashier of the bank to process cash transfer/request to/from Cash Center, Bangko Sentral ng Pilipinas (BSP) or other branch.

Group and User Maintenance Transaction Limits Staff Limits Audit Log

Transaction SetUTILITIES TRANSACTIONS File Processing

• (1)Store and Forward; (2)Late Check processing; (3) Payroll Processing Data Download

• (1)FoRex Rates; (2)Bank Charges Back-up and Restore Facility

• back-up and restore data Parameter Set-up

• Product Set-up Product Details Interest Computations Product Charges

• Transaction Set-up Transaction codes and mnemonic Effect on tellers total including the behavior of the transaction

Transaction SetREPORTS ON DEMAND REPORTS

• This pertains to reports that are available to users any time of the day and will reflect real time information and balances.

Processed SAF Electronic Journal Tellers Total Branch Cash Position Vault Transaction Journal List of Accounts with Automatic Transfer Agreement List of Accounts Exempted from Withholding Tax List of Accounts Exempted from Below Minimum Charge List of Accounts Limited to Cash List of Dormant Account List of Escheated Accounts Bank Statement Numerical Listing of Accounts Alpha Listing of Accounts

Transaction Set INWARD CHECK REPORTS

List of Processed PCHC Inward Check for the Day List of RCOCI

START of DAY REPORTS List of Processed Late Checks List of Maturing TIME DEPOSIT List of Un-acted Matured TIME DEPOSIT

END of DAY REPORTS• Daily Batch Report

Daily Service Charge Report Uncollected Service Charge Report Place/Lift SPO for the Day Place/Lift Hold/Garnish for the Day List of Account with Float Adjustment for the Day List of Reactivated Accounts for the Day List of Terminated CTD/SSA for the Day Posted Transaction Report (CASA/TD) List of Late Checks Deposited for the Day

Transaction SetCONT. END of DAY REPORTS

…Daily Batch Report Miscellaneous Transaction Report Summary of Balances CASA Trial Balance List of Outstanding CTD/SSA

• Weekly List of Opened Accounts for the Week List of Closed Accounts for the Week List of Maturing CTD/SSA for the Week

• Monthly List of Outstanding Service Charges for Collection Outstanding SPO Outstanding Hold/Garnish Outstanding MC/GC/DD Monthly Accrual Report Accounts Moved to Dormant/Escheat for the Month Breakdown of Deposits

END OF DAY BATCH PROCESS Collection of uncollected service charges

process the debiting of uncollected charges to accounts

Automatic Transfer for Accounts with ATA process the automatic funding to the receiver accounts with ATA thatfalls below the required minimum maintaining balance

Accumulate Daily Balancethis process aggregates the accounts’ balance. The aggregate balanceshall be used in the computation of average daily balance and accruedinterest.

Compute / Post Interest this process computes interest bearing accounts based on the defined computation basis

END OF DAY BATCH PROCESS TD Interest Computation

• Compute interest of all outstanding TD accounts • Compute for AIP, WTAX, interest expense of maturing CTD/FSD and

book to the respective accounts.

Computation of Average Daily Balance this process computes the average daily balance of each account based on the accumulated daily balance.• New Account – ADB for accounts opened during the month is

computed as accumulated daily balances divided by the difference of the opening date and last calendar day of the month plus 1

• Old Account – ADB is computed as accumulated daily balance divided by the calendar days of the month.

Accrued Interest Payable (AIP) Computation

END OF DAY BATCH PROCESS Below Minimum Service Charging

this process charges active and dormant accounts which fall below therequired minimum balance depending on the computation basis asdefined in the parameters unless exempted from service charges.

Reclassification to Dormant / Escheat • Dormant – All accounts that have been inactive as per bank-specified

period of time shall be reclassified from active to dormant account status

• Escheated – All accounts that have been dormant as per bank-specified period of time shall be reclassified from dormant to escheated account status.

Automatic Closure of Active and Dormant Zero Accounts this process automatically closes active and dormant accounts with zerobalances for a bank specified period of time.

FLOATS ROLLDOWN PROCESSA process that automatically decreases float days of check deposited to an account

• Tuesday - Local Check Deposit

• Tuesday End of Day batch processing, system performs floats rolldown

• Tuesday End of Day batch processing, system performs the rest of batch processes

END OF DAY BATCH PROCESS

Date TranCd Debit Credit CurrBal AvailBal FltDay

Mon 10000 10000

Tue LocChk 5000 15000 10000 2


Tue LocChk 15000 10000 1

FLOATS ROLLDOWN PROCESS• Wednesday - After open branch

• Wednesday End of Day batch processing, system performs floats rolldown

• Wednesday End of Day batch processing, system performs the rest of batch processes

• Thursday - After open branch check deposited can be withdrawn



Wed LocChk 15000 10000 1


Wed 15000 15000 0

COMPUTATION OF AVERAGE DAILY BALANCE (ADB)ADB is computed as accumulated daily balance divided by the calendar days of the month.

• Accum Cur = ( 1000 * (jan 5 – jan 1)) + ( 6000 * (jan 10 – jan 5) + ( 7000 * (jan 31 – jan 10 + 1)

• Accum Avail = ( 1000 * (jan 5 – jan 1)) + ( 6000 * (jan 12 – jan 5) + ( 7000 * (jan 31 – jan 12 + 1)

• ADB based on Current Balance = 188000/31 6064.51• ADB based on Available Balance = 186000/31 6000.00


Day Trancd Debit Credit CurrBal AvailBal AccumCur

AccumAvail

Jan 1 1000 1000 1000 1000

Jan 5 Cash 5000 6000 6000 10000 10000

Jan 10 LocChk 1000 7000 6000 41000 40000

Jan 12 7000 7000 55000 53000

Jan 31 7000 7000 188000 186000

ADB COMPUTATION VARIATIONS• Accounts opened during the month

• ADB computed can be : Accumulation / no. of days of the month

=134000/31= 4322.58

Accumulation / no. of days from opening date= 134000/15= 8933.33



AccumAvail

Jan 17 Cash 10000 10000 10000 10000 10000

Jan 20 Wdl 2000 8000 8000 38000 38000

Jan 31 8000 8000 134000 134000

ADB COMPUTATION VARIATIONS• With back-dated transaction• Posted Jan 10, backdated Cash Deposit of 4000 for Jan 8

• Accum Cur = ( 1000 * (jan 5 – jan 1)) + ( 6000 * (jan 10 – jan 5)) + 11000

• Adjusted Accum Cur = Accum Cur + (4000 * 2)



AccumAvail

Jan 1 1000 1000 1000 1000

Jan 5 Cash 5000 6000 6000 10000 10000

Jan 10 LocChk 1000 7000 6000 41000 40000

Jan 10 Cash-BD 4000 11000 11000 45000 43000

SERVICE CHARGE COMPUTATION BASIS • Balance Type to Consider

– Current Balance– Available Balance

• Balance Computation Basis– ADB– Lowest Balance

• Frequency of Charging– Monthly– Quarterly– Semi-Annual– Annually

• Required Minimum Balance• Execution Cycle

– Monthly– Quarterly– Annually


Service Charge Computation Method• Fixed– Dormancy Service Charge = 25.00 per month– Below Minimum Service Charge = 100.00 per month

• Rated– Pre-termination charges

Usually a percentage of the interest computed


Service Charge Computation Method• Tiered

Base Charge = 50

Amount to be computed = 15000 Charge = 50 + 100 + 200

= 350


Lower Limit Upper Limit Charge

1000 10000 100

10000.01 100000 200

100000.01 Above 300

Service Charge Computation Method• Threshold

Base Charge = 50

Amount to be computed = 15000 Charge = 50 + 200

= 250


Lower Limit Upper Limit Charge

1000 10000 100

10000.01 100000 200

100000.01 Above 300

END OF DAY BATCH PROCESSService Charge Computation Method• Multiple

RCOCI ChargesBase Charge = 2000 (1,000 for Issuer & 1,000 for Drawee)Per Multiple = 40000Per Day Multiple Charge = 200

1. Returned Check Issued = 15000 Charge = 2000 + 2002. Returned Check Issued = 55000 Charge = 2000 + (2 * 200)

Within 40,000

Twice the 40,000multiple

INTEREST COMPUTATION BASIS• Balance Type to Consider

– Current Balance– Available Balance

• Balance Computation Basis– ADB– Lowest Balance

• Base Year to use in computation– 365– 360

• Minimum lowest balance allowed for interest to be computed• Minimum ADB allowed for interest to be computed


INTEREST COMPUTATION BASIS• Frequency of Interest Computation

– Daily– Monthly– Quarterly– Annually

• Frequency of Interest Posting– Monthly– Quarterly– Annually

• Frequency of Interest Compounding – Monthly– Quarterly– Annually


INTEREST RATE COMPUTATION METHOD• Fixed • Tiered

Base Rate = 1

ADB Computed = 15000 Rate= 1 + 1 + 2 = 4%


Lower Limit Upper Limit Add On Rate

1000 10000 1

10000.01 100000 2

100000.01 Above 3

INTEREST RATE COMPUTATION METHOD• Threshold

• Base Rate = 1

• ADB Computed = 15000• Rate= 1 + 2 = 3%


Lower Limit Upper Limit Add On Rate

1000 10000 1

10000.01 100000 2

100000.01 Above 3

INTEREST COMPUTATION CONSIDERATION• During accruals, – include the first day, exclude the last day OR exclude the

first day, include the last day• Computation of Interest– Computed Daily

Daily Interest = (EOD Bal * Rate)/ Base yearMTD Interest = MTD Interest + Daily Interest

– Monthly ComputationMonthly Interest = (Accumulated Daily Balance * Rate)/ Base year


Automatic Transfer Agreement• Higher combined ADB requirement ( every ATA pair )• Source Account

– One or more source accounts possible– Can be a source account to any number of destination accounts– Source account is usually a savings account– Debiting hierarchy

• Debit according to highest available balance• Debit according to highest current balance

• Destination Account– Usually a current account– Allows zero maintaining balance– Can not be used as a source account


Date Trancd Credit Debit

1/15/08 NCSHDP 1000

1/16/08 NCHKDP 2000

1/16/08 NCSHDP 1000

1/17/08 NWDL 5000

1/19/08 NWDL 7000

1/25/08 NCSHDP 2000


Date Trancd Credit Debit

1/31/08 CMEXTR 6000

1/31/08 DMEXTR 12000

EXTRACTION OF NOBOOK ITEMS

TERMINOLOGIES• Banking Day – also referred to as business day or working day

• Cut-off Time – time defined in the parameter set-up to determine if check deposited is still a regular check transaction or a late check transaction

• Float Day – days before a check deposited becomes available/withdrawable

• Late check – checks deposited today but exceeds the bank defined cut-off time; posted next banking day

• Mode of payment – manner of payment used during transaction;

can either be cash, on-us check, off-us check, debit to account or credit to account

TERMINOLOGIES• Outward Checks – other bank checks deposited to a bank that will be

forwarded to Phil Clearing House Corp (PCHC)

• Inward Checks – checks issued by account holders of the bank deposited to another bank

• No Book – over the counter transactions without presenting a passbook

• Value Date – transaction that supposed to be for a previous banking day but was posted on the current banking day

• DAUD – Drawn Against Uncollected Deposit

• DAIF – Drawn Against Insufficient Funds

TERMINOLOGIES

• Account Status – refers to the status of an account defined by the bankActive – an account with regular financial transactionDormant – an account that do not have financial

transaction for 2 yearsEscheat – an account that do not have transaction for

10 yearsClosed – an account with zero balance; closing of an

account can be triggered by an account holder or the bank.

TERMINOLOGIES• Interest Type – manner of interest used for the interest

computation of the account

• Minimum Maintaining Balance – balance needed to be maintained in order not to have a below minimum service charge

• Balance to Earn Interest – balance needed in order to earn an interest

• Balance type – balance used in order to compute for the interest; also used to get the below minimum charge Current Balance – refers to the total account balance Cleared Balance = Available + Hold Available Balance = Current Balance – Float – Hold

TERMINOLOGIES• Computation Basis – refers to the manner used in

computing the interest; also used to know if an account falls below the minimum balance. This is used together with the balance type

• Average Daily Balance (ADB) = computed as Summation of Daily Balance over Number of calendar days

• Lowest Balance – the lowest ending balance of an account for the month

• Base Year – refers to the denominator to used in the interest computations can either be 360 or 365.

TERMINOLOGIES• Tax rate – withholding tax deducted to products earning

interest• Interest Rate – rate given to an account used for interest

computation• Term – used for Time deposit placement; term defines

the number of days of TD placements becomes matured.• Maturity Date – it is computed as the Placement date +

Term days – 1• Bank/Service Charge – fees used across the system;

charges/payment for bank services

FOR DEMO CONTACT DETAILS:ANDREA “ANDI” YLAGAN CASTRO

(+63) 916 250 2503(632) 515 06 46

[email protected]

Company Rider2010 All Rights Reserved• Associated Computers & Communications Enterprise reserves all rights

in this presentation, including all creative contents, from concept development to copy, artworks and all its related applications. No parts of this presentation may be used without the full written consent of the Company.

• This presentation is intended only for the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If in the event that you have taken possession of this presentation, inadvertently or otherwise, you are hereby notified that any usage, dissemination, distribution or copying of this communication is unlawful, and you are requested to please notify us by telephone: (632) 515-0646.

• Thank you for your cooperation.

banking system presentation

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