A Report on

Nepal Clearing House Limited

Submitted By:
Anil Bhandari (01)
Bhuwan Pd. Pant (02)
Bhuwan Rana (03)
Bilon Lawati (04)
Biman Khadka (05)
Deb Bdr. Gharti (06)
Kishor Paneru (07)

Submitted To:
Narendra Bista
School of Management
Tribhuvan University

In the partial fulfilment of the requirement for the degree of

Master of Finance and Control

Kirtipur
March, 2016
 Acknowledgement

The success and final outcome of this report required a lot of guidance and assistance
from many people and we are extremely fortunate to have got this all. Whatever we have
done is only due to such guidance and assistance and I would not forget to thank them. I
respect and thank Narendra Bista for giving us an opportunity to do this work.

I would like to gratitude especially to respected sir Dr. Jitendra Dangol, Dr. Dhurba
Lal Pandey, Prof. Dr. Madhav Raj Koirala and member of the SOMTU for providing us all
support and guidance which made us complete the assignment.

We also thank all our friends who have more or less contributed to the preparation of
this report. We will be always indebted to them. The study has indeed helped us to explore
more knowledgeable avenues related to our topic and we are sure it will help us in our future.

Group-I

MFC, 4th Semester

SOMTU
 Table of Contents

CHAPTER-1....................................................................................................................................4
1.1 Background of the company.............................................................................................4
1.1.1 Company Profile.................................................................................................................5
1.1.2 Provision Regarding NCHL in Rules and Regulation –...................................................10
1.2 Objective of the Study.....................................................................................................10
1.3 Research Methodology...................................................................................................11
I. Nature of data:.................................................................................................................11
 Secondary data................................................................................................................11
II. Data collection techniques..............................................................................................11
CHAPTER-II.................................................................................................................................12
Data Presentation and Analysis.....................................................................................................12
2.1 Key Functions of NCHL.................................................................................................12
2.2 NCHL Importance for BFIs............................................................................................12
3.3 Major Achievement of NCHM.......................................................................................14
CHAPTER-III................................................................................................................................17
3.1 Conclusions..........................................................................................................................17
 List of Table

Table 1Regular Electronic Cheque Clearing...................................................................................9

Table 2 Express Electronic Cheque Clearing................................................................................10
Table 3 High Value Cheque Clearing............................................................................................10
Table 4 Major Achievement of NCHM.........................................................................................15
 List of Figure

Figure 1 Key financial indicators Gross Profit/total operating income, Net Book worth per share
.......................................................................................................................................................15
Figure 2 Key financial indicators ROA and ROI..........................................................................16
 CHAPTER-1

1.1 Background of the company

Nepal Clearing House Ltd. (NCHL) is a public limited company established on 23rd
December 2008 (9th Mangsir 2065) under the leadership and guidance of Nepal Rastra Bank.
It has the equity participation from Nepal Rastra Bank, commercial banks, development
banks, finance companies and Smart Choice Technologies (SCT), a private card switch
operator. NCHL recognizes banking & financial technology oriented services as one of the
key ingredients for the Banks/FIs to improve their efficiency, productivity and also provide
innovative financial solutions to their customers. And NCHL intends to help them realize
these by providing various technology based payment related services without having to
invest heavily into infrastructures by the Banks/FIs.

U/s 4(C) NRB Act- 2058, The objective of the bank is to regulate, inspect, supervise and
monitor the banking and financial system and under same act U/s 5(i), the function, duties
and powers of the bank is to establish and promote the system of payment, clearing and
settlement and to regulate this activities. To meet the objective of NRB, NCHL has come into
act as support pillar for achieving the objective set by NRB.

NCHL has initially implemented and operated NCHL-ECC System in Nepal offering banks
and financial institutions with an electronic medium of cheque clearing and will later
establish a national payments gateway to facilitate electronic payments & financial
transactions across banks and financial institutions within the country. Electronic Cheque
Clearing (NCHL-ECC) System provides means to electronically transfer cheque images
through a secure medium thus completely replacing the traditional physical routine of
moving paper-cheques among the banks and clearing house, which has resulted in significant
reduction of tedious and time consuming manual process of cheque clearing, both for the
banks and for the customers.
Individual banks and financial institutions are enrolled within NCHL as participating
members and are responsible for their clearing operations through the NCHL-ECC System.
 Shareholders Holding: Nepal Rastra Bank 10% Commercial Banks Development Banks
80% Finance Companies Smart Choice Technologies P. Ltd. 10%

1.1.1 Company Profile

NCHL Logo

Regulatory Body NRB

Authorized Capital RS. 250000000
Paid-up capital Rs. 150000000
No. of employees 12
NCHL Members 128 (NRB -1, Commercial Banks -30, Development
Banks -61, Finance Companies -36)
NCHL Slogan

a) Vision of NCHL

To be a leading provider of electronic payment and settlement services

b) Mission of NCHL

The missions of NCHL are as follows,

 Establish and operate national systems for clearing, payments and settlements;

 Facilitate the development of secure & trusted new payment methods and
technologies in Nepal;
 Protect and increase shareholders’ values;
 Establish as an organization of choice for the employees.
c) Product/ Service of NCHL
 According to NCHL NCHL’s main focus has always been to providing best possible
products and services to the member banks and financial institutions. NCHL-ECC system
is the first national payment and settlement system in Nepal and is providing multiple
services through the system. NCHL will continuously enhance and innovate to introduce
multiple products and services. NCHL-ECC system is an image and MICR based cheque
processing solution wherein original paper cheque is converted into an image for
electronic processing and is transferred through a secured medium between participating
member BFIs. The physical movement of the cheques are truncated or stopped at the
level of the presenting bank resulting in a faster and easier processing of the cheque
transaction. Here are the main products and services that NCHL is currently providing
and has planned in near future.

 NPR Electronic Cheque Clearing

This is an electronic cheque clearing service for NPR denominated cheques. Participating
members need to have settlement account in Nepali currency at Nepal Rastra Bank to
avail this service. It is available for both standard (MICR based) and non-standard (non-
MICR based) cheques.

 FCY Electronic Cheque Clearing

This is an electronic cheque clearing services for USD, GBP and EUR currency
denominated cheques. Participating members need to have settlement account in the
respective foreign currency at Nepal Rastra Bank to avail this service. It is available for
both standard (MICR based) and non-standard (non-MICR based) cheques.

 Express Cheque Clearing

Express cheque clearing service is a special arrangement of short duration for cheque
presentment, response and settlement, allowing its member BFIs and their customers to
present and realize their cheques faster. Currently one express cheque clearing session is
available for all four currencies namely NPR, USD, GBP and EUR. However, NCHL
will soon extend this service by introducing 2nd and 3rd express sessions, subject to
approval from NRB.
 High Value Cheque Clearing

This is an electronic cheque clearing services for cheque amount exceeding NPR 100
Million and up to NPR 200 Million in case of NPR cheques and exceeding FCY 1
Million and up to FCY 2 Million in case of USD, GBP and EUR cheques.

 National Cheque Archive

National Cheque Archive is an additional service provided to the member BFIs to have
an access to the historical cheques and transaction details. All the cheque transactions
older than three months are moved from the NCHL-ECC System to National Cheque
Archive system to store the cheques for up to 7 years and are made available to the
member BFIs on request.

 Interbank Payment (NCHL-IPS) System

Under implementation NCHL-IPS is a system for clearing large volume financial

transactions that provides a mechanism for the participating banks and financial
institutions to safely and efficiently transfer funds on behalf of their customers as well as
for their own trading purposes. It facilitates nationwide fund transfer between the
accounts held at different banks. It promotes payment and settlement of non-paper based
transactions based on international standard of payment systems. And it supports both
direct debit and direct credit transactions on deferred net settlement basis.

d) Electronic Cheque Clearing Time

Electronic Cheque Clearing (NCHL-ECC) is an image-based, cost-effective, MICR
cheque processing & settlement solution where an original paper cheque is converted into
an image for electronic processing of the financial transactions between participating
member Banks/FIs. The physical movement of the cheques are truncated or stopped at
the level of the presenting bank in the NCHL-ECC System. The cheque does not
physically travel to the clearing house or to the paying branch as it used to do in manual
clearing process, resulting in a faster and easier processing of the cheque transactions.
NCHL-ECC currently supports cheques clearing of four currencies NPR, USD, GBP and
EUR with presentment cut-off time at 14:00, paying bank response cut-off time at 15:00
and final settlement at 15:30 for standard (MICR encoded) cheques. And for non-
standard (existing non-MICR) cheques, presentment cut-off time is at 12:00, paying bank
response cut-off time is at 15:00 and final settlement at 15:30. The detail timing for
electronic clearing are as follows.
- Regular Electronic Cheque Clearing

Electronic Cheque Clearing (NCHL-ECC) is an image-based, cost-effective, MICR

cheque processing and settlement solution where an original paper cheque is converted
into an image for electronic processing of the financial transactions between participating
member Banks/FIs. The physical movement of the cheques are truncated or stopped at
the level of the presenting bank in the NCHL-ECC System. The cheque does not
physically travel to the clearing house or to the paying branch as it used to do in manual
clearing process, resulting in a faster and easier processing of the cheque transactions.
Regular electronic cheque clearing supports clearing of cheques of up to NPR 100
million in case of NPR cheques and up to 1 million in case of USD, GBP and EUR
cheques from Sunday to Thursday. The session timings of regular electronic cheque
clearing sessions are as follows:

Table 1Regular Electronic Cheque Clearing

Regular Presentment Presentment Reply Cut-off Settlement Start

Clearing Start Time Cut- off Time Time Time
14:00 (T-1) 14:00 (T-1) 15: 00 (T) 15:10 (T)
Source: http://nchl.com.np/

- Express Electronic Cheque Clearing

Express NCHL-ECC is a special clearing session of short duration for cheque

presentment, response from paying bank and NRB settlement. It has 2 hours window for
presentment to final settlement thus allowing the Banks/FIs and their customers to
present and realize their cheques faster. Currently there are three express clearing
sessions for four currencies NPR, USD, GBP and EUR. 1st express session is available
from Sunday to Friday. 2nd and 3rd express sessions are available from Sunday to
Thursday. The session timings of express clearing sessions are as follows:
 Table 2 Express Electronic Cheque Clearing

Timing 1st Expresses 1st Expresses 1st Expresses

Session Open Time 10:00 AM (T) 11:00 AM (T) 12:00 PM (T)
Presentment Cut-off Time 11:00 AM (T) 12:00 PM (T) 13:00 PM (T)
Reply Cut-off Time 11:30 AM (T) 12:30 PM (T) 13:30 PM (T)
Reply Cut-off Time 12:00 PM (T) 13:00 PM (T) 14:00 PM (T)
Source: http://nchl.com.np/

- High Value Electronic Cheque Clearing

High value electronic cheque clearing is a special clearing session for presentment of
high value cheques of above NPR 100 Million to 200 Million in case of NPR cheques
and above 1 Million to 2 Million in case of USD, GBP and EUR cheques. It is available
from Sunday to Friday. The session timings of high value electronic cheque clearing
sessions are as follows:

Table 3 High Value Cheque Clearing

High Value Presentment Presentment Reply Cut-off Settlement Start

Clearing Start Time Cut- off Time Time Time
10:00 (T-1) 10:30 (T-1) 11: 30 (T) 12:00 (T)
Source: http://nchl.com.np/.

e) Valued Clients to NCHL

NCHL values the highest standards of ethics, integrity and teamwork. NCHL is
committed towards its members, shareholders, partners and employees.

1.1.2 Provision Regarding NCHL in Rules and Regulation –

A. Income Tax Act, 2058 for the purpose of payment to other counter parties in excess
of NPR 50,000.00 through cash has been voided in general. Thus, the Income Tax
Act has encouraged in cheque transaction than cash. This has paved the safe
 transaction regarding lending or payment. This compulsory provision regarding
cheque has inflated the importance of existence of NCHL.

B. NRB through unified directives 2072 for A, B and C banks the transaction amount
equal or excess to 50 lakhs need to be A/C payee. And the cheque drawn against,
company or firm or institution or office name requires transacting through A/C payee.

In terms of cross transaction within BFI’s or with different firm cheque has been
compulsory.

The related provision has made the cheque as important tool for transaction and which is i.e.
money flotation is the essential part of mobilization of economy and it comes NCHL where it has
vital role ensuring the secure settlement system facilitating the cross bank transaction into one
spot. Thus, the requirement of NCHL is inevitable. With growing size of economy the role of
NCHL will instead of degrading will move towards the undetectable part of economy. In simple
words, the role of NCHL will grow in future.

Nepal Rastra Bank (NRB) acts as a member of NCHL for clearing its cheques; acts as a
settlement bank; and also as a regulator. NCHL is guided and regulated by NRB. Following are
the latest rules and guidelines prescribed by NRB for NCHL and its clearing services.

Rules & Guidelines guiding NCHL are -

1. Nepal ECC Rule Book

2. Nepal ECC Operating Rule
3. ECC Cheque Standard & Specifications
4. Ammendment to Cheque Standard Specification
5. 2070_71-Circular_26-Ammendments on Cheque standard & Specification
6. 2071_72_For_A_,_B_&_C_Class--Circular_31-Non MICR Related-new
7. NCHL-IPS Operating Rule Book Ver1.0

1.2 Objective of the Study

The general objective of this report is to know the importance of NCHL. In order to meet
these general objectives, this paper developed the following specific objectives.
 General objective

 To know about the existence of NCHL

Specific objectives

 To find out key functions and importance of NCHL for BFIs

 To analyze the financial performance of NCHL

1.3 Research Methodology

I. Nature of data:

The study is based on the both primary and secondary data. Secondary source of data were
collected on a specific time interval to show the performance of NCHL in current situation.
The time period selected is from 2068/69 to 2071/72.

 Primary Data

This report is prepared based on the primary data. The primary data are collected
through the semi-structural interview. The interview was taken with the NCHL staff.

 Secondary data
This paper used secondary source of data to show the financial performance of
NCHL. The quantitative data are taken from annual report of NCHL.

II. Data collection techniques

This study has collected quantitative and qualitative data from the both primary and
secondary source. Primary data were collected to the help of semi-structural interview with
the employee of NCHL. Similarly, secondary data were collected from the NCHL official
web site http://nchl.com.np/

III. Data analysis tools

The study used tables, figure and chart to show the financial performance and electronic
cheque clearing time. Similarly, the financial performance is measured based on the ratios
analysis. The following ratios are used in this report to show the financial performance of
NCHL.
 CHAPTER-II
Data Presentation and Analysis

2.1 Key Functions of NCHL

1. As clearing house give guarantee for all the transactions and acts as counterparty for
all the transactions it will never have open positions in the market.
2. It ensures that all parties adhere to the system and procedures so that various parties
in the market can do trading smoothly which in turn leads to more confidence of the
players on the markets and hence it increases liquidity in the market.
3. It ensures a proper risk management system in place by stipulating that margin is
maintained which is of two types – initial and maintenance margin and hence
accounting is done for all the gains and losses on daily basis and hence chances of
default are reduced considerably.
4. It ensures that delivery of the underlying asset is consistent in terms of quality,
quantity, size etc. so that there is no confusion among parties, in other words all
contracts are standardized.

Hence from the above one can see that clearing house is the backbone of the derivatives
market and is very important for smooth running of the derivatives markets.

2.2 NCHL Importance for BFIs

Nepal Clearing House Limited is a public limited company established to provide better
technology oriented service for the banking and financial institution. Moreover, NCHL
recognizes banking & financial technology oriented services as one of the key ingredients for
the Banks/FIs to improve their efficiency, productivity and also provide innovative financial
solutions to their customers. And NCHL intends to help them realize these by providing
various technology based payment related services without having to invest heavily into
infrastructures by the Banks/FIs. The NCHL provides following benefits to the BFIs through
the electronic cheque clearing system.
  Same day clearing and settlement at Nepal Rastra Bank (NRB) with minimum settlement
time of (T+0) and maximum of (T+1) irrespective of the geographic location of the
bank/branch.
 No need to physically move the cheques from the branches to NRB clearing house.
Cheques will be truncated at the presenting bank which would speed up the process of
settlement and ultimately alter the clearing cycle.
 Introduces a fully electronic solution using the modern digital communications and
networking technologies to almost replace the paper based process.
 Better reconciliation / verification process as banks/FIs can know their net position at any
point of time.
 Limited cheque movement means saving on transportation and manpower cost.
 Possibility of reducing manpower required for transfer and handling of cheques, which is
a direct reduction on transaction costs.
 Increase in operational efficiency.
 Reduces operational risk of cheque losses and cheque related frauds by securing the
transmission route.
 Better customer service due to elongated customer window.
 Enables both the Presenting and the Paying bank to track and audit the processes
involved from the point of initiation to the final stage of cheque truncation.
 Ease of maintaining and accessing cheque image and other associated data that will ease
day to day operation and for historical data.
 Possibility to differentiate and priorities cheques as VIP cheques.
 On-line notification between the clearing house and banks.
 Possibility of extended such services to the entire country with no geographical
dependency and providing new services/ products based on ECC to its customers. It even
allows the banks/FIs to provide 24x7 services.

3.3 Major Achievement of NCHM

NCHL was established on 23rd December 2008 (9th Mangsir 2065) under the leadership
and guidance of Nepal Rastra Bank. The NCHL has been facing several challenges in the way to
perform its functions. However, NCHL got various achievements through the continuous effort
to provide technology oriented services to the banks and financial institution. The major
achievements are summarized in the following table.

Table 4 Major Achievement of NCHM

Time Period Major Achievement

23rd December 2008 Company incorporated

22nd December 2010 Electronic Cheque Clearing (NCHL-ECC) project initiated

29th December 2011 NCHL-ECC project implementation completed

3rd February 2012 NCHL-ECC started with foreign currency denominated cheques

9th April 2012 NCHL-ECC started with Nepali currency denominated cheques

16th December 2012 Migration of manual clearing to NCHL-ECC at Kathmandu complete

9th April 2014 Nationwide rollout of NCHL-ECC completed

16th February 2015 Interbank Payment System (NCHL-IPS) project Initiated

Source: Annual Report 2014/15

 3.4 Financial Situation of NCHL

Figure 1 Key financial indicators Gross Profit/total operating income, Net Book worth per share

and Net Profit/ Total Operating Income

120
105.98 107
100
89.93
80
Gross profit/ total operating
60 60.6 income
Book Net worth per share
48.4
40 net profit / total operating income
32.1 Gross profit/ total operating
24.8 income
20
14.6
0
20112/13
-9.6 13/14 2014/15
-20

Source: Annual report of NCHL, 2014/15

Figure 2 Key financial indicators ROA and ROI

70.00%

60.00% 43.78%

50.00%

40.00%
ROI
30.00% ROA
18.36%

20.00%
15.11%
10.00% 10.30%

0.00%
2013/14 2014/15

Source: Annual report of NCHL, 2014/15

 This paper taken major financial indicators like Book Value per Share (BVPS), Gross
profit to total operating income, Net profit to total operating income, Return on Assets (ROA)
and Return on Investment (ROI) to measure the financial performance of Nepal Clearing House
Limited (NCHL).

From the above depicted figure 1, the Book Value per Share (BVPS) is increasing in trend
showing that Rs. 89.93 for fiscal year 2012/13, Rs. 105.98 and Rs. 107 for fiscal year 2013/14
and 2014/15 respectively. It signals that the value of the shareholders increases in days to come.

Gross profit to total operating income for the fiscal year 2012/13 accounted 32.1 per cent and it
has increased up to 60.6 per cent for F/Y 2013/14. In contrast, it has decreased to 48.4 per cent in
F/Y 2014/15. The major factor, appearing such result for NCHL may be the reductions in
number of banks due to mergers and acquisitions process. The income for NCHL from
membership fees has substantially decreased in current fiscal year.

The same consequence is for Net profit to total operating income due to the mergers and
acquisitions of banks. It accounted negative 9.6 per cent for F/Y 2012/13 and it has increased up
to 24.8 per cent in 2013/14. In contrary, it has decreased to 14.6 per cent for F/Y 2014/15.

The figure 2 revealed that the both key financial indicators for NCHL like Return on Assets
(ROA) and Return on Investment (ROI) have decreased in F/Y 2014/15. ROA accounted 15.11
per cent and 10.30 per cent for F/Y 2013/14 and 2014/15 respectively whereas ROI Accounted
43.78 per cent for F/Y 2013/14 and 18.36 per cent for F/Y 2014/15.
 CHAPTER-III

3.1 Conclusions

Business is dynamic. Business operates in ever changing economy. Technology is part of

everyday life and constantly ever changing mechanic. Adherence is that Nepal soon enough will
adopt to the EPS (i.e. Electronic Payment System) and that introduces the RTS (Real Time
Settlement) and the question lies beneath how NCHL will be adapted to the change? Would it
be?

The fundamental of market is that – survival for fittest rule. Survival of those is only possible
which learn to exists. The whole part of creating the story plot is that NCHL need to play the
facilitator role for EPS and RTS. i.e. Adapt, Change and Survive.
 References

FAQ’s regarding NCHL -

1. What does Nepal Clearing House Ltd. (NCHL) do?

Nepal Clearing House Ltd. (NCHL) is initially mandated to introduce and implement a
nationwide electronic cheque clearing (ECC) system in Nepal with an objective to
automating the process of cheque clearing, which was earlier being done manually
through Nepal Rastra Bank clearing division. The company will later introduce various
other electronic payment and settlement services and ultimately establish a national
payments gateway to facilitate electronic payments and financial transactions across
banks and financial institutions within the country.
 
 NCHL has currently implemented a state-of-art technology under a name of NCHL-ECC
System and will primarily provide cheque clearing services to the banks and financial
institutions.

2. Who are behind NCHL?

NCHL is established under the leadership of Nepal Rastra Bank with equity participation
of Nepal Rastra Bank, Commercial Banks, Development Banks, Finance Companies and
Smart Choice Technologies (SCT) P Ltd.
 
3. Who regulates Nepal Clearing House Ltd. (NCHL)?
NCHL is regulated by Nepal Rastra Bank.

4. What is cheque truncation system in the context of electronic cheque clearing?

In a cheque truncation system, physical movement of a cheque is truncated or stopped at

some point in the clearing cycle, either at the level of the presenting bank or at the
clearing house or at the paying bank.
 
In the context of NCHL-ECC System implemented in Nepal, cheque is truncated at the
level of the presenting bank. In order words, the cheque does not physically travel to the
clearing house or to the paying branch as it used to do in manual clearing process.

5. Is there any movement of physical cheques?

No, there is no physical movement of cheques. Physical cheques are truncated at the
presenting bank (Bank of First Deposit). In case of need, the physical instrument can be
retrieved from the presenting bank through the paying bank.

6. How does clearing take place and the cheques passed on?
 The presenting bank sends an electronic image of the cheque along with the relevant
information like the MICR code line data, date of presentation, presenting bank, etc., to
the clearing house. The clearing house forwards the images along with data files to the
drawee/ paying bank. The paying bank branch takes the ‘Pay’ or ‘No-Pay’ decision based
on the image of the cheque.
Thus, with NCHL-ECC System, the need to move the instruments physically across
branches is not normally required.

7. How are the images captured?

The electronic images and MICR data of cheques are captured using cheque scanners by
the presenting bank. Prior to scanning by the presenting bank, all cheques are required to
be stamped at the back (right hand side) of the cheque with the details of Presenting Bank
Name, Branch Name and Date of Presentment. Each cheque is allowed to be presented
twice in case of rejection in the first presentment.

8. How does the system ensure that cheque images are transferred securely between the
banks and NCHL?

Cheque images are transferred securely between the banks and NCHL through highly
secured and state-of-the-art technology infrastructure which ensures authentication and
security of the images being transferred. Audit logs at all levels are maintained for future
references.

9. What care and precautions are to be taken by banks and their customers to ensure
quality images and to avoid frauds?

All cheques need to be image friendly. The customers should preferably use dark colored
ink while drawing the instruments. Care should be exercised in the use of rubber stamps,
 so that it would not interfere with the material portions of the cheque. The date of the
cheque, payee’s name, amount, signature and MICR line data are the basic features which
are essential in a cheque. The use of rubber stamps, etc., should not overshadow the clear
appearance of these basic features in the image. In order to ensure that all essential
elements of a cheque are captured in the image during the scanning process, bank
customers also need to exercise appropriate care in this regard.
10. How long does it take for a cheque to clear through NCHL-ECC System?

All cheques are be cleared and settled on the same day (T+0) provided they are presented
before the cut off time. Cheque presented after the cut off time are cleared and settled the
following day (T+1).

11. What are the benefits of NCHL-ECC System to the customers of the banks/ FIs?

a. Faster clearing cycle.

b. Beneficiary’s account gets credited the same day on which the paying account gets
debited.
c. Better customer service – Elongated customer window.
d. Elimination of float available to cheque issuing bank customers, as they would tend to
lose the advantage of utilizing the funds in their account even after issue of cheque till it
reaches the counters of the paying bank branch.
e. Clearing service by NCHL can be extended to the entire country with no
geographical dependency.

12. Are there any changes in the process of cheque clearing for the customers?

No, there is no change for the customers in the way they deposit the cheques and it is
processed. But customers need to be aware of the new changes in the cheque standards &
its security features, deposit & settlement times and charges that may be applicable.
 
13. Does the customer need to change the way I complete a cheque?

There are no material changes as such but customers need to be aware regarding use of
new design cheque:
i. Make sure that you write the name of the payee and amount in words, clearly and
correctly. Always fill out your new cheques using an ink pen or a ballpoint pen with black
or dark blue permanent ink. Do not use a pencil, light coloured or fluorescent or non-
permanent ink to complete the cheque;
ii. Write the date inside the “Date” box clearly in dark permanent ink.
iii. Write or enter the amount inside the “Amount in Figures” box. Write the amount in
figures as close to the left side of the box as possible to avoid any fraudulent alteration of
the amount in figures;
iv.  If you print the amount in figures using a typewriter or a computer, print the currency
symbol together with the amount in figures by the same device. If you use a computer to
enter information on the cheque, please use a well maintained printer with permanent dark
ink (black or dark blue) ribbons. If you use an ink jet printer or a laser printer, do not let
the ink to penetrate the cheque paper and the printer, as it can adversely affect the security
features;
v. Do not write or sign on the space allocated for the MICR code line to ensure accurate
reading of MICR printing. There should be no stamping (including company rubber
stamp), perforations, stapling or any other intrusion in this area. Do not let your signature
overlap the MICR Code line or the “Amount in Figures” box;
vi. If you use a typewriter to write your instructions on the cheque, use ribbons of dark
colours (black or dark blue). Do not use total transfer (correctable) ribbons.
vii. Do not circle or underline any information on the cheque;
viii. Do not use carbon or carbon-back ink for transfer to the second copy of the cheque.
ix. Do not use facsimile signature, as it has a potential to disappear in the image of the
cheque.
x. Do not fold or mutilate the cheque as it can damage the data on the MICR line.
Envelopes used for mailing cheques should be sufficiently large to enclose the cheque
without folding.
14. What are the differences between Regular Session and Express Session?

Express Session is a special session of short duration for presentment, response from
paying bank and NRB settlement. Express session has 1 hours of window for cheque
presentment and settlement happens at 12:00 AM. Regular Session is a one full day
clearing cycle where by the settlement happens at 3:30 PM. 

15. What are the clearing session timings?

Presentment for regular session (clearing of MICR encoded standard cheques) starts from
14:00 (T-1) and ends at 14:00 (T+0); Respond by paying bank ends at 15:00 (T+0); and
settlement at NRB ends at 15:30 (T+0). Presentment for Express Session as given below:

1st Express Session: Presentment starts from 10:00 (T+0) and ends at 11:00(T+0);
Respond by paying bank ends at 11:30 (T+0); and settlement at NRB ends at 12:00
(T+0).
2nd Express Session: Presentment starts from 11:00 (T+0) and ends at 12:00(T+0);
Respond by paying bank ends at 12:30 (T+0); and settlement at NRB ends at 13:00
(T+0).
3rd Express Session: Presentment starts from 12:00 (T+0) and ends at 13:00(T+0);
Respond by paying bank ends at 13:30 (T+0); and settlement at NRB ends at 14:00
(T+0).
Customers are required to consult their bank as they may set their own cut-off times for
their operational arrangements.
 
16. Are the current cheques already issued by the Banks/FIs to the customers are
supported by NCHL-ECC System?

Only the MICR encoded cheques issued by the Banks/FIs will be supported by NCHL-
 ECC system. Old cheques (without MICR encoding) will not be supported by NCHL-
ECC system. Request your bank for issuing MICR cheque in case you are still in
possession of old non-MICR encoded cheques.
 
17. What is High Value Clearing Session?

High value electronic cheque clearing is a special clearing session for presentment of
high value cheques of above 100 Million to 200 Million in case of NPR cheques and
above 1 Million to 2 Million in case of USD, GBP and EUR cheques. It is available from
Sunday to Friday.