Bangladesh's system of payments

The payment system department at Bangladesh Bank is in charge of supervising all payments
and transactions, accepting and processing a wide range of payment instruments, and taking
part in the clearing and settlement procedures.

The Bangladesh Bank distinguishes between two different payment systems:

1. Retail Payment Systems: BEFTN, NPSB, and BACPS

2. RTGS for High Value Payment Systems

Cheque Clearing Procedure

Two parts make up the Bangladesh Automated Clearing House (a part of general banking):
BACPS and BEFTN. A transaction involves the receiving bank and the paying bank as the two
parties. The receiving bank must verify the basics, such as the amount, writing, date, and so on,
before accepting a cheque from another bank. The receiving bank cannot verify whether there is
sufficient funds in the account. In a bank branch, the checker and maker are the only individuals
who examine each check. The checker-maker department receives a received check and
forwards it to the appropriate party. Nowadays, banks utilise technology like RFID to check the
amount of cash in the vault. The receiving bank takes a picture of the check using CIT (check
Image Truncation). After this, there is no physical movement of the cheque. A transaction
involves the sending and receiving banks as well as BACH for clearing. When uploading, the
check is either classified as a high value check (five lakhs or more) or a standard value check.
Regular value checks cannot be cleared after 12.30 p.m. (will be cleared within 5 p.m.), and
high value checks cannot be transferred after 11.30 a.m. (will be cleared within 3 p.m.). Regular
value checks cannot be passed as high value checks, while vice versa is true for the opposite. It
takes a positive pay instruction (PPI) to provide the go-ahead to cash a cheque. The bare
minimum is typically 50,000 BDT, but banks may set a different minimum in specific
circumstances. The paying bank is responsible for checking a cheque. According to the BACPS
standards, a paying bank can reject a cheque for 29 different reasons. Insufficient money is the
main justification for rejecting a cheque. The Negotiable Instruments Act makes it illegal to use
inadequate funds.

Electronic Fund Transfer Network for Bangladesh (BEFTN)

BEFTN is only a command, as opposed to previous fund transfers via instruments. It is a

positive development for green banking. In BEFTN, there are 5 parties: the originator, the
receiving bank, the originating bank, and the EFT operator (Bangladesh Bank). Fund transfers
from the recipient's account are known as an EFT Debit instruction for the recipient's bank. An
EFT Credit instruction is one that directs the transfer of money to the recipient's account.
Following are some examples:
EFT Debit: Titas Gas receives payment.

EFT Credit: Taka in received from stock market dividends.

In 2021, the EFT Operating Guideline v2 was published.

Bangladesh's National Payment Switch (NPSB)

54 banks and 55 banks, respectively, have operational POS systems.

There are 12,890 ATMs, 95,307 POSs, 1,910,776 credit cards, and 25,980,681 debit cards.

The two categories of card transactions are card present transaction and card not present
transaction. The bank must delete the card due to the hazards associated with card not present
transactions. According to Bangladesh Bank instructions, the bank from which I am withdrawing
money must pay the sum. According to Bangladesh Bank guidelines, camera video must be
maintained for at least a year. The central bank's dispute management department investigates
and resolves problems involving ATM payments.

See the instructions for ATM Cash Withdrawal. I punch the card at the acquirer bank, not the
issuer bank, which issues the card. At the end of the day, banks settle all transactions.

(RTGS) Real Time Gross Settlement

RTGS is an electronic inter-bank settlement system that allows for real-time, gross fund
transfers from one bank to another. One lac BDT is the high value transaction for RTGS. Retail
small payments are related with NPSB, whereas transactions starting at $1 lac are associated
with RTGS. 100 Taka is the transaction fee for RTGS. The KYC form is crucial for RTGS. For
instance, RTGS transactions involving new accounts can be dubious because they may include
money laundering. In these situations, banks are required to prepare suspicious transaction
reports (STR).

Future Payment System Challenges

security, coordination with other authorities, evaluation and introduction of innovative projects
(fintech), use of the cloud, cryptocurrencies, blockchain, and distributed ledger technology.