Further efficiency enhancements to CITS and SLIPS by LankaClear

In a modern economy the payment system is a major component of the country’s infrastructure facilities. Developing the payment infrastructure in line with the economic growth is very essential and is indeed a very challenging task.

The world is like a global village. The volume of transactions keeps growing rapidly. All banks are part of this global village. No bank can exist in isolation. Not only the payments within the country but effective cross border payments systems are also required for imports and exports, travel purposes and other money market and capital market transactions which involves foreign exchange.

At the same time due to technical advancements in the payments arena new innovations take place very frequently. Therefore, efficient and easy payment methods will become an absolute necessity.

LankaClear as the national payments infrastructure provider is bound to provide accurate, secure and efficient services at cost effective prices to banks and who then can extend it to the general public.

Keeping the above objectives in mind and addressing the current market requirements, LankaClear continuously makes enhancements to its existing clearing services and makes efforts to introduce new services.

The recent efficiency enhancements made to its Cheque Imaging and Truncation System known as CITS and improvements made to Sri Lanka Interbank Payments System known as SLIPS are discussed here. With these changes LankaClear offers greater benefits for participating banks and the general public.

Enhancements made to CITS

Under CITS, the accepting time of cheque images from banks will be extended to 7:30 p.m. from 7 p.m. with effect from 1 February 2013. For this extension from 7 p.m. to 7:30 p.m., there is a small administrative charge which has to be paid by the respective bank.

Irrespective of this 30 minute extension, LankaClear continues to deliver the banks’ inward data collected from collecting banks, which indicates the cheques written by their customers in favour of other parties to each bank before 12 midnight.

Banks have time to submit their clearing data to LankaClear which indicates the cheques they cannot honour or in simple terms, the cheques they cannot execute payments, till 11:30 a.m. the following day. LankaClear then will forward each bank’s cheque return data before 1:15 p.m.

This new change will reduce cheque realisation time to 17:45 hours (less than a day). As such, banks are able to credit the proceeds to their customers earlier than before irrespective of the location of the paying banks and the collecting banks, thus enabling next day (T+1) clearing of cheques.

Enhancements made to SLIPS

Under the enhancements done to the SLIPS, banks are able to get more information relating to their clearing items submitted under SLIPS, such as original transaction of the return transaction, return period, value dates, and viewing facility of validation of their transactions. This can be summarised as follows.

SLIPS Bank Communication Module (BCM) will identify original transaction of the return transaction to solve the current issue of recognising the original transaction when the transaction is returned by the receiver.

SLIPS BCM will verify the transaction return period with the introduction of the Business Calendar and the return period is configurable based on the transaction code.

Flexible field level configurations in SLIPS BCM, will allow the validation of transaction type level value limit, value dates (T+0, T+1, etc.), allowable return days and defining of mandatory fields.

Interface will be provided to validate outward files at banks’ end, thus guaranteeing the acceptance of the transaction.

As a result of the above process improvements made to SLIPS, banks are able to submit their customer payments requests to LankaClear till 12:30 p.m. This is for same day value transactions. At present, this time is 12 noon.

This will enable banks to accept requests for SLIPS transactions from their customers for an extended time, depending on their required processing time to process the requests. The afternoon session also will be extended to 6:30 p.m. from 6 p.m. with effect from 1 February 2013.

All these improvements were enabled due to continuous enhancements made to the software systems of CITS and SLIPS applications by LankaClear. At the same time the security of these transactions are also guaranteed by the LankaClear through its Certificate Service Provider facility known as LankaSign using digital signatures.

In addition to these efficiency enhancements, at present LankaClear is engaged in a large project which will bring significant improvements to payments system in Sri Lanka. As a result of this, in the near future LankaClear will offer an online, real time payment system with accurate, secure and an efficient service at cost effective prices to the general public of this country under the delegated authority of the Central Bank of Sri Lanka.

LankaClear will continue to provide services to a wide array of payment channels and develop products with the global technological advancements, which in turn will facilitate Sri Lanka to become a financial hub in Asia. This will meet the increased demand which arises through increased economic activities in Sri Lanka as well as neighbouring countries through cross boarder arrangements.