Professional Documents
Culture Documents
Acknowledgement
Executive Summary
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CHAPTER 5 Recommendations
1.0 Payment and Cash Management
2.0 Remittance
3.0 Clearing
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CHAPTER 6 Conclusions
Conclusion
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in the United States through its offices in five western states and in conjunction with Wells
Fargos 31 regional commercial banking offices in 10 western states. In addition, the Group has a
non-equity strategic alliance with Wells Fargo Bank, which provides access to a wide range of
banking services through that banks more than 1,900 staffed outlets. The Group also has a nonequity alliance with Wachovia Corporation, one of the leading corporate banks in the United
States, with business relationships in 40 states.
the
Large:
Major:
Technology:
Service Coverage & Customers:
2.3 Branches
1. Dhaka Main Office- DAK
2.
3.
4.
5.
6.
7.
8.
9.
10.
servicing of all the ATMs. Currently a total 11 ATMs are in operation. The ATM center also
deals with issuance, termination and servicing of the ATM cards. On a whole, the ATM center is
the department that is solely responsible for all the activities related to ATM and is the facilitating
department that enables customers 14 hour banking support.
2.5.5 ATB centre
ATB refers to Automated Tele Banking. This department deals with the back office servicing of
the HSBC phone banking services provided to customers. This department is basically
responsible for the activation of ATB, ATB pin generation, and ATB security management, ATB
blocking and troubleshooting of all ATB problems. This department is fairly new and was
constructed on January1001. Currently this department is staffed with one executive and one
officer.
2.5.6 Payments and Cash Management
HSBC Bangladesh has introduced a number of Payments and Cash Management Products These
Are:
Accounts Management Service
Payments & Collection
Hexagon Cheque Writer
Electronic Banking
HSBC was the pioneer in introducing electronic cash management solutions in Bangladesh, by
introducing its state-of-the-art proprietary software, Hexagon, back in 1997. This was initially
made available to corporate clients only but has since been expanded to include banks and retail
clients.
With Hexagon, the Banks proprietary cash management system, corporate customers can access
banking services from anywhere in the world to view account balances and statements, make
transfers and international payments, and to open documentary credits, by using only a PC, a
modem and a telephone line.
2.5.7 HEXAGON
HSBCs Electronic Banking Platform
HSBC maintains one of the worlds largest private data
communications networks and one of their most successful customer
service driven technological innovations is Hexagon. Hexagon
provides corporate and institutional customers with PC access to
cash management services, trade services, securities services and other information through a
single-platform using a fully integrated proprietary system. There are about 60,000 Hexagon
users worldwide, with more than 120 corporate customers in Bangladesh.
Hexagon provides powerful tools to the customers to monitor their accounts from anywhere, at
any time of the day or night: Balance and transaction information is available 14 hours day, 264
days a year. Balances can be reviewed and reported in a variety of ways by account, bank,
currency and location.
Transaction Capabilities of Hexagon:
Payments:
Full payment capabilities (third party/inter-company) in over 40 currencies globally.
Paper-based and electronic payments may be generated.
Automatic routing via the most effective means using HSBC s links to all its branches.
Repetitive payment/transfer instructions can be stored in secure templates.
Payments can be initiated in offline mode and stored for later amendment and/or
authorization.
Payment instructions can be imported from the customers back office system.
Hexagon can support future value dated transactions up to 44 days.
Time Deposits:
Hexagon may also be used to make Time Deposits in a variety of currencies and
maturities.
Deposit details may be sorted in different categories to simplify portfolio management.
3.2 Management
The Branch Manager heads all the departments and is the topmost authority of the branch. The
Manager generally monitors smooth functioning of all the departments and ensures that all the
departments are operating according to rules and regulations. He is assisted by two Assistant
Managers and other officers. An Organogram
presented below:
NSCisManager
Assistant Manager
Clearing
Department
Assistant Manager
Easy Pay
Department
Remittance
Department
MIS
Department
PCM
Department
Treasury
Department
funds at a lowest possible rate of interest, through maintaining effective relationship with other
banks and following the Government rules and foreign exchange regulations
Engage in different social
welfare activities.
2.0 OBJECTIVES
According to the topic my objectives have been set below. To make it more specific the topic
parts have been divided in to 1.Broad objective and 2.Specific objectives.
To explain the meaning and concept of Cash Management System of Foreign Bank.
To be aware of the need and objective of Cash Management
To see the payment process with outward remittance
To learn the payment process through inward remittance
To be familiar with the payment process through outward & inward clearing
To recognize the same day clearing.
4.0 METHODOLOGY
The method I have employed to do my study on HSBC is by observation; I also took the help of
the officials of the Payment and Cash Management, Remittance and Clearing department to
clarify my quarries and used secondary data like DIB the official books of each departments,
HSBC web site and some graphical data to come up with writing on the topic. I also had one to
one discussion one topic with the people responsible of managing this section in HSBC.
5.0 SCOPE:
This report will include the payment to and from account that arise from clearing,
collection and remittance cheques, demand drafts and pay orders or other instruments.
This report will not include the payment of cash or bearer cheques, thats payments are
made over the counter.
6.0 LIMITAION
As I took the initiative to write a detail procedure of how HSBC works in managing the payment
procedures, I came across a lot of difficulties, which slowed me down and in some case changed
my way to writing. As I gradually came to understand that the departments are payment
departments in HSBC Bangladesh, so deriving data from the departments are any sort is a severe
breach of law within the HSBC code of conduct. As a result, my project part could not be backedup by data of any sort and also I might not present the current picture of HSBC BD with its
payment procedures process that they follow in operation. Some other limitations are given in
below:
Large-scale research was not possible due to constraints and restrictions posed by the
organization.
In many cases, up to date information is not published.
Getting Relevant papers and documents were strictly prohibited.
Many procedural matters were conducted directly in the operations by the top
management level, which may also have some sort of restrictions.
To protect the organizational loss in regard of maintaining confidentiality, some parts
of the report are not in depth.
Payments to Collections
Liquidity Management.
Delivery Management.
The objective of payments and cash management is to manage receivables and payables and
deploy the surplus fund through structured one stop solution. It wants to minimize cost and
maximize return and also ensure effective planning, management and monitoring of cash and cash
equivalent resources.
The Key success factors for PCM:
Extensive core bank network.
Efficient processing set up.
Reliable courier service.
Integrated system.
Cash Management Collections is the family of products and services provided by the bank that
help the customers manage their sales collection & account reconciliation. Smart collect means
collection of cheques and cash deposited at HSBC branches that is being handled very
systematically around the country.
The benefits are as follows:
Funds will be in one single account that is deposited in any branch.
Consolidated Deposit and credit details will be provided to the customers on a daily basis.
Collection of Cash/ Cash Equivalent Instruments (Cheque/ Pay Order/ Draft) deposited at
HSBC Branches (presently at Dhaka/ Chittagong).
Same day credit for cash and day 1 credit for local cheques (day 0 being the day of deposit).
Intra day information available and easy automated reconciliation through Hexagon.
In addition to the branches Cash may also be deposited in partner bank branches in Dhaka
city at free of charge to their central account with HSBC.
Pricing: Free
Advantages of Collections:
Deposit details Available on day 1 for all areas.
Cheque level information is available.
Centralize control of receivables.
Transit time is reduced.
Their reports will be also available through e-mail.
2.0 REMITTANCE
The intending traveler is a customer of the AD bank or is sufficiently well known to the AD Bank
or the intending traveler has paid relevant Travel Tax. The intending traveler has a valid passport.
7. Foreign Nationals:
The Authorized Dealers may issue foreign currency TCs to foreign nationals without any limit
and foreign currency notes up to US$300/- or equivalent per person against surrender of
equivalents amounts in foreign currencies. The TCs and foreign currency notes should however,
be delivered only on production of ticket for a destination outside Bangladesh and the amount
issued should be endorsed on the relative passports.
Authorized Dealers may allow recon version of unspent Taka funds of foreign tourists into
foreign exchange on production of the encashment certificate of foreign currency. Recon version
shall be allowed by the same AD with which the foreign currency was encashed earlier. AD
should retain the original encashment certificate and relative forms where re conversion exceeds
US$5000/-.
10. Remittance for Haji:
Authorized Dealers may release foreign exchange to the intending pilgrims for performing Hajj as
per instructions/circulars to be issued by the Bangladesh Bank each year.
11. Other Private remittance:
Applications for remittances by private individuals for purposes other than those mentioned above
should be forwarded to Bangladesh Bank for consideration & approval after assessing the
bonafide of the purpose of remittance on the basis of documentary evidence submitted by the
applicant.
2.1.2 Official & Business Travel
1. Official Visit:
For official or semi officials visits abroad by the officials of govt., Autonomous/ Semiautonomous
institutions etc., Authorized Dealers may release foreign exchange as per entitlements fixed by the
Ministry of Finance from time to time, In such cases, the applicant for foreign exchange shall be
required to submit the sanction letter and the competent authority's Order/Notification/Circular
authorizing the travel.
2. Business Travel Quota for Now Exporters:
Up to US $6,000/- or equivalent may be issued by an AD without prior approval of Bangladesh
Bank to a new exporter for business travel abroad, against recommendation letter from Export
Promotion Bureau, Bonafide requirement beyond US$6000/- is accommodated by Bangladesh
Bank upon written request through an AD with supporting documents.
3. Business Travel Quota for Importers and Non-exporting producers:
Subject to annual upper limit of US$5000/- importers are entitled to a business travel quota @ 1
% of their imports settled during the previous financial year.
4. Exporters' Retention Quota:
i) Merchandise exporters may retain up to 40% of realized FOB value of their exports in foreign
currency accounts. However, for exports of goods having high import content (such as readymade
garments, POL products including furnace oil bitumen, electronic goods etc.,) the retention quota
is 7.5% of the repatriated FOB value.
Exporters may at their option, retain the foreign currency in interest bearing renewable term
deposit accounts with Authorized Dealers in US Dollar, Pound Sterling DM or Japanese Yen with
a minimum account of US$2000 or Pound 1500.
ii) Service exporters (excluding indenting commission or agency commission of indenting house
of buying house respectively) may retain 5% of their repatriated income in foreign currency
accounts or as renewable time deposits with Authorized Dealers, Funds from these accounts can
be used to meet expenses for bonafide business travel abroad.
Two forms are prescribed by Bangladesh Bank are used for purchase of foreign currencies such
as:
EXP Form: Remittances received against exports of goods from Bangladesh are
done by form EXP.
Form C: Inward remittances equivalent to US$ 2000/- and are above are done by
Form C. However, declaration in Form C is not required in case of remittances by
Bangladesh Nationals working abroad.
2.2.3 General Principles and Precautions for purchasing instruments
Utmost care should be taken while purchasing Currency Notes, Travelers cheque, Demand Draft
& similar instrument for protecting the bank from probable loss as well as safety of the Bank
officials concerned.
2.2.4 Foreign Currency (Bank) Notes
Branches may freely buy foreign currency notes from Bangladesh as well as foreign nationals.
Currency notes, especially notes of higher denominations, i.e. US $ notes of 50 and 100
denominations, should be checked carefully to ascertain their genuineness.
Foreign Exchange Department shall maintain currency wise F.C. in hand Control Ledger to
record each days transactions.
On the last working day of each month the branch shall calculate the exchange gain or loss and
carry out necessary adjustment in the control ledger.
Foreign currencies shall be purchased at the rates instructed by the Head Office.
2.2.5 Travelers Cheques
Payment against TCs
The customer tendering the Travelers Cheques should be asked to sign the TCs at the designated
places in front of the concerned bank official who would satisfy himself about its genuineness
with reference to the customers signature already appearing on the TCs and his passport. Should
there be any doubt; purchase contracts of the TCs may be asked for.
Collection of Proceeds of Encashed TCs
Encashed TCs should be sent to the relevant foreign correspondent for collection.
2.2.6 Foreign Drafts and Cheques
The branch should exercise due care and ordinary prudence for purchase of foreign currency
denominated drafts, cheques and similar kinds of instruments. The instrument should not be
purchased unless the customer is well known to the branch as a regular trustworthy client. An
Indemnity Bond should be obtained for refund of the money along with interest in the event of
dishonors of the instruments.
2.2.7 Telegraphic Transfer (T.T)
Test number appearing on the TT must be checked and authenticated by the concerned official.
Confirmation from the Head Office should be received about the proceeds having been credited.
The usual formalities including declaration on Form C should be observed.
3.0 CLEARING
3.1 Cheques
3.1.1 Negotiability and Endorsement
Cheques are negotiable instruments which are negotiated when they are transferred from one
person to another in such a manner as to make the transferee the holder of the cheque.
Bearer cheques are negotiated by simple delivery, whereas order cheques are negotiated by the
endorsement of the holder followed by delivery.
3.1.2 Crossed Cheques
Various types of crossing affect the legal obligations of bankers and the legal rights of holders. In
Areas where an image of the cheque is used for clearing and payment, crossing of cheques is not
required provided that there are sufficient controls in place to ensure that the same effects of
crossing are applied appropriately.
3.1.3 Cheque Deposited to Accounts with ASP Areas
Department instructions and practices must ensure that customers have title to cheques credited to
their accounts. Counter staff must scrutinize cheques paid in to ensure that:
Cheques are bearer
Cheques are drawn in favor of account holders
Cheques are endorsed to account holders and that endorsement appear to be regular
There are no technical irregularities such as errors in date and amount.
Any irregularities on the cheques should be brought to the attention of the customer before further
processing.
Departmental instructions must stipulate that executives or staff officers must approve the deposit
of cheques which are not made payable to bearer or account holders, or which exceed pre-set
transaction limits.
3.1.4 Cheque alterations
Cheque alterations must always be signed in full by drawers, in order to minimize the risk of
fraudulent alterations.
3.1.5 Cheque as initial deposits to new accounts
ASP Areas must not accept cheques drawn in favors of third parties as initial deposits for new
accounts, irrespective of whether or not such cheques contain what appear to be valid
endorsements.
3.1.6 Cheques in favor of limited company
ASP Areas must exercise caution whenever customers Endeavour to pay in cheques drawn or
endorsed by limited companies or firms known to be the employers of the customer concerned.
Particular care must be taken when such cheques have been signed by customers on behalf of
employers.
Enquiries need not be made when cheques can reasonably be assumed to represent salary,
commissions, severance, or other similar payments.
3.1.7 Checking of Cheque
Operations Managers must ensure that, subject to any quick cashing services and, within
delegated limits of authority, all inward cheques above designated thresholds are examined to
ensure:
Words and figures agree
Cheques are neither post-dated nor out-of-date
Signatures have been verified
Any alterations have been signed in full
3.1.8 Cancellation of signature
Area Managers, or their delegates, must establish specific limits of authority for staff within
which the signatures on customer cheques must be cancelled, i.e. scored through in red ball pen
and initialed by executives or staff officers, as appropriate. The limits must be in accordance with
all applicable regulatory requirements and common practices in the local market.
In Areas where an image of the cheque is used for clearing and payment, cancellation of
signatures is not required provided that there are sufficient controls in place to ensure that the
signatures have been verified.
3.1.9 Routine precautions
Executives must ensure that the following situations are involved:
Drawings against non cleared cheques.
Deposits where the cheques are signed by a party to the account or by a known associate.
Deposits where cheques are repeatedly drawn on a particular bank in another area.
Cash withdrawals or outward ITs against non cleared cheques.
Account positions where the level of outstanding of non cleared cheques remains
constant, or is on the increase.
Accounts where the daily turnover is out of proportion to the over night balance.
Contractual relationships between ASP Areas and their customers have been suspended
for any reason
Customers' accounts contain insufficient funds to meet cheques and no arrangements exist
for their settlement
Cheques are drawn against non cleared effects
Drawings would exceed agreed facilities
There exist any legal bars to payment (e.g. garnishee orders)
ASP Areas are aware that payment of cheques, would constitute a breach of trust.
Thousands
Volume
200
175
150
125
100
75
50
Thousands
12 5
12 0
Support
Month
JUN 08
MAY 08
APR 08
MAR 08
JAN 08
Avg. YTD 07
FEB 08
N S C T r a n s a c tio n V o lu m e 2 0 0 8
25
Account Services
Clearing
EasyPay
IB
REMs
NSC CHG
NSC SYZ
ATM/BONDs/CARDS
115
PCM
110
10 5
10 0
95
90
85
80
75
In this graph the total successful transactions of the year of 2008 is shown. Here we can see the
month wise transaction volume of total NSC of HSBC Bangladesh.
65
Volume
70
60
55
50
45
40
35
30
25
20
15
10
5
JUN 08
MAY 08
APR 08
MAR 08
FEB 08
JAN 08
Avg. YTD 07
M onth
Support
A c c o u n t S e r v ic e s
Cle a r in g
Ea s y Pa y
IB
PCM
REM s
NS C C HG
NS C S Y Z
A TM /B O ND s /C A RD S
30%
In the below graph the transactions of Payment and Cash Management department in year 2008
are showing in monthly basis.
25%
In the below graph the volume of activity in year 2008 are showing in monthly basis.
60,000
90,000
20%
3.0 REMITTANCE
In the below graph the activity and transactions of Remittance department in year 2008 are
showing in month wise and the percentage change in activity and transaction from previous
month and the increased percentage based on average activity volume and transaction of year
2008.
In the below graph the total activity volume and transaction volume of Remittance department in
year 2008 are showing in monthly basis.
40%
4.0 CLEARING
30%
8,000
In the below graph the activity volume trend of Clearing department in year 2008 are showing in
month wise and the percentage change in activity and transaction from previous month and the
increased percentage based on average activity volume and transaction of year 2008.
20%
In the below the graphs are showing the total activity volume and transaction volume of Clearing
department in the year of 2008 on monthly basis.
64,000
62,000
70,000
60,000
All the above graphs are showing the payment procedures through activity volume and
transaction in HSBC Bangladesh. In the general Banking payment procedures the above 3
department is the back bone of HSBC.
At present to open an account at Payment & Cash Management department, the rules and
regulations are rigid. The official procedure should be flexible to open an account. The
minimum balance to open an account should be reduced.
58,000
57,461
At present due to inadequate and inefficient manpower, payments and collections are
delaying. Sometimes they delays in transfer payment of salary of other organization. If
they want to get the customers satisfaction, they need to recruit manpower, train them up
and turn them into efficient and effective manpower.
PCM should increase the total number of products they have. They need to introduce
more innovative products like payment plus, web bank etc.
They should avoid nepotism and favoritism.
2.0 REMITTANCE
HSBC should widen their clients base to invite more out ward remittance transaction in
other currencies.
The Remittance Department of HSBC becomes very busy in January as much more
outward remittance transactions takes place in this month. So, HSBC Management
should arrange more manpower for Remittance Department in this month. One of the
means of arranging this additional manpower might be to accept more internees in this
month.
HSBC should intensify personal banking in order to attract travelers and students in
making outward remittance through HSBC.
HSBC should undertake promotional activities in November & December for providing
personal banking services to travelers and students.
HSBC should undertake promotional activities in November & December for providing
personal banking services to travelers.
HSBC should undertake promotional activities in November & December for providing
personal banking services to students.
HSBC should explore the possibility of widening its personal banking network in other
countries to tap the inward remittance coming from those countries especially in Middle
East countries wherefrom inward remittances come to Bangladesh in plenty.
HSBC should intensify personal banking in order to attract foreign wage earners making
inward remittance through HSBC.
The number of human resources in the Remittance Department is really insufficient to
give services to huge volume of work. So, number of staff should be increased in this
department.
Human resource is another sector for the Remittance department to be developed
urgently. Human resources, in the department, need to be equipped with adequate
computer knowledge so that they can work faster and efficiency can be optimized. Bank
can arrange training program for them.
3.0 CLEARING
Cheques are coming from different branches to NCS (Motijheel branch). After
processing, cheques are going to Bangladesh Bank for clearing. As a result, it takes more
time for clearing the cheques. The customers arent getting quicker service & they are
unsatisfied. If the cheques are process in the individual branch and directly go to
Bangladesh Bank, then the clearing processes are quicker than present time & they should
improve good relationship with Bangladesh Bank.
The transportation system has to be develop more and sending mail/currier should faster.
HSBC must look over the time of payment to the customer regarding of normal clearing
cheques.
HSBC have to develop their collection process faster for the collection cheques.
If HSBC cut the return charges as low as possible than may be the personnel account
holder will be motivate more and might gain lots of customers.
CONCLUSION
Consumer banking industry has been treated as a prospective financial sector in Bangladesh.
More and more banks and non-bank financial companies are entering the industry. The industry
became so attractive that multinational bank like HSBC has entered the market and wants to lead
the market. However, the entrance of banks like HSBC has brought revolutionary changes in
banking services. People get better service than ever before. It becomes lot easier for people to get
loans and investing money into diversified portfolios. Sophisticated services like ATM, Phone
banking, Online transaction etc. has been brought by this new generation banking.
As the services improved workflow of the banks has been changed dynamically as well. Banks
use more sophisticated ways to assess payments. Quick assessment process pressurizes the
Clearing officers to use sophisticated ways of payment assessment. Though HSBC use its own
investigation along with third party investigation for payment assessment the whole procedure
may be developed furthermore. Central bank may become more helpful by providing helps like
hosting database (about customers) on the net.
Thus by providing these various services through different department in the HSBC is playing a
vital role in the banking system as well as the economy of Bangladesh. This study may at least be
able to be recognized as a significant one, the study have been able to figure out the customers
knowledge about payment procedures of HSBC. This report may give a bit of enlightenment to
the readers about the scenario of General Payment Procedures in Bangladesh.