5:13 pm - Sunday April 18, 9171

All banks to go for real-time settlement next year

Banks will be able to make instant settlement of foreign currency and government securities-related transactions as well as local currency transactions when Bangladesh Bank will introduce the ‘real-time gross settlement’ system by July next year.

According to a BB report, the RTGS system will replace the existing deferred net settlement system under which banks settle transactions in 1-2 days.

bbThe RTGS is an electronic settlement system where transfer of funds or securities takes place from one bank to another on a real-time and gross basis.

Real-time settlement means transaction does not need any waiting period. Transactions are settled as soon as they are processed, reports the New Age.

Gross settlement is booked in central bank’s account on one-to-one basis without netting with any other transaction.

Banks can now transact the high value cheque by 3:00pm in a working day while the regular value cheque by 5:00pm and the electronic fund transfer by 12:00am (next day), BB officials said.

For the other payment methods like automated teller machine, point of sales, mobile banking and internet banking, different time schedules are set in the present DNS system, they said.

The BB earlier had decided to set only local currency settlement through the RTGS system but now it has included foreign currency and government securities settlement through the new system, a BB official told New Age on Sunday.

Banks will be able to purchase and sell the foreign currency on instant basis among them through the RTGS system.

Besides, they will be able to settle the foreign currency-related transaction through the new system.

The ADB has given $1.73 million to set up the hardware and the software required for the new mechanism while the World Bank will provide technical support for the programme, the official said.

The BB will float the tender for the RTGS by this month and it will install the system by March 2015.

The central bank has already asked banks to set up an implementation team to perform the RTGS system.

Besides, the BB has directed them (banks) to bring their all branches under the core banking solution and to introduce full-fledged internet and online banking.

The BB asked banks to strengthen their treasury management as money circulation will be increased when it will introduce the RTGS.

Under the new system, the core banking solution of banks and the BB will be attached with the RTGS.

The inter-bank transaction will be settled from the banks’ current accounts with the BB, the central bank official said.

Another BB official said that the transaction in the payment systems among banks would be held on a real time basis after the launch of the RTGS, meaning that a bank would not wait to get the liquidity it would demand from other banks.

The RTGS will help businesspeople to get liquidity from banks without any delay which will ultimately boost the country’s economic activities, he added.