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Background:
e-Cheques (MICR cheques) were introduced in Bangladesh through a
directive by Bangladesh Bank in 2010. The most important component
of e-Cheques are Automated Clearing House (ACH) and Bangladesh
Automated Cheque Processing System (BACPS).
Introduction:
What are e Cheques (MICR) Cheques
MICR cheques are not very different from regular cheques. MICR stands
for Magnetic Ink Character Recognition. These cheques contain a line
written in Magnetic Ink that can be read by special cheque scanners.
3) The depositing bank will send the OCE file to BACPS through a
secure computer and data network.
4) BACPS will then process and send the images and information to
the paying banks for validation.
Fig. 4 Software Interface
5) When the image and cheque information is going from the BACPS
to the paying bank it will be called ICE (Inward Clearing
Envelope).
6) Paying banks will examine the pertinent images and information
for validation. If the information is found OK, paying bank will
send them back to the BACH for payment. If any inconsistency
found (like signature mismatch, insufficient fund, etc.), paying
banks will return them with specific reasons.
7) At a specific cut-off time, BACPS will accumulate all the
information, work out a single net amount for each bank, and
send the return information to the collecting banks with net
figure.
8) Collecting banks will process the return information and adjust
the customer-accounts accordingly. These operations of BACPS
using Information and Communication Technology (ICT) are
secure, reliable and fast with no impact on the customers.
Control systems
BACH & BACPS have many control and security features built in. For
example secure computer and data network, strong legal structure and
law enforcement.
Pricing model
MICR cheques are a free service provided by banks to their customers.
There may be a small charge for printing the cheques, but banks often
absorb this cost.
Strengths
The strength of MICR cheques are as follows:
1) Wide acceptance & trust: Majority of Bangladeshi people already
use cheques, people trust cheque as a valid means of making
and receiving payments.
2) Legal: The law against non-payment of cheque (cheque bounce)
is strong and relatively easy to apply. So most people do not
think of committing fraud with cheque.
3) Validation: When cheques are cleared for payment, the
signature, cheque number etc are all verified. So from a technical
point fraud is more difficult.
4) Low cost: Cheques are a low cost payment method. All current
accounts provide cheques free of cost although there may be a
small service charge for printing cheques. There is no additional
cost involved.
What does the future hold
Currently the MICR cheque scanning is done only at the Banks. This
system can be extended up to the level of merchants. Merchants can
make an arrangement with their respective banks so that the bank
cheque scanners are available at the check out counter of the
merchant. Customer can pay using his/her cheque book. The cheque
will be scanned and deposited into the merchants bank account.
Conclusion
eCheques or MICR cheques have a very bright future in Bangladesh,
because the legal and governmental obstacles. In the case of MICR
cheques this obstacle has been overcome.
Reference:
Bangladesh Bank Payment and Settlement Systems
Guide Chapter 10 - www.bangladesh-
bank.org/pub/annual/anreport/ar0708/chap10.pdf
An Overview - http://www.bangladesh-
bank.org/regulationguideline/paymentsettlementsr2009.pdf