Nigeria Automated Clearing System (NACS)
NACS is used to describe the automated clearing system of the entire banking and financial industry for both electronic instruments (ACH) and derivatives/images paper-based instruments (cheques). Hitherto, the Nigerian Clearing System was manually operated and paper based, such that instruments took several days to clear and the beneficiary receive value. However, with the automation of the clearing system, this whole process takes less than 48hrs in its entirety.
NACS also made possible the Cheque Truncation System where physical clearing instruments are dematerialized into electronic format at a stage within the bank of first deposit (Presenting Bank) while only the electronic format (images/MICR data) is transmitted electronically to the Clearing House. The original physical instrument is subsequently warehoused by the Presenting bank.
Automated Bulk Clearing is an avenue through which funds transfer instructions of corporate and institutional customers of banks which have been captured electronically as a single file are presented or delivered by banks to NIBSS for processing at the Automated Clearing Session. Likewise, on an hourly basis, customers of banks issue several instructions to their bankers to debit their accounts and credit respective beneficiaries domiciled at various banks.
All these instructions are captured electronically by the customers’ bank and submitted to NIBSS via Automatic Clearing Operations and are processed in bulk. The ABC operations sorts all these instructions accordingly “bank by bank” and after each clearing session delivers each banks’ bunch of instructions originating from other banks to them, also as electronic files. Each bank acts on the basis of these instructions received to give value to their respective customers by crediting the customers’ account.
This service was launched as an exclusive NIBSS service on Monday, 9th January 2006 and leverages on the following mechanisms:
- AUTOMATED DIRECT CREDITS (ADC) is designed to facilitate paperless clearing of bulk credits (salaries and pensions, shareholders’ dividends, etc.) Automated Direct Credits enjoy the same day clearing and settlement.
- AUTOMATED DIRECT DEBITS (ADD) is designed to facilitate the remote debiting of bank account e.g. insurance premium payments, schedules donations, utility bill payments like water rates, electricity bills and telephone bills, etc. based on payers’ pre-authorizations.
Central Mandate Management System (CMMS) is introduced by NIBSS Plc to address the problems and challenges faced by Banks, and Utility Service Providers (PayTV, Leasing, insurance companies, etc.) in the settlement of periodic or recurrent bills by subscribers.
CMMS is established as a central electronic repository of pre-authorized and scheduled Direct Debit mandates of Bank customers, who are also subscribers to Utility service companies otherwise called Billers. This new system diarizes the due dates of subscriber payments and debits subscribers’ or customers’ accounts on due date thus facilitating billers to process bill payments effortlessly and in a cost-effective manner. With CMMS, banks are also able to provide modern bill payment support for their respective corporate and individual customers.
The Central Mandate Management System is designed to aid the successful implementation of the Central Bank of Nigeria’s Guidelines on Nigeria Direct Debit Scheme (GNDDS) referenced BOD/DIR/GEN/CIR/01/025A released and published on February 18, 2010.
All the 22 Deposit Money Banks have accepted the Central Mandate Management System as an initiative that would complement the CBN’s effort at improving the adoption of Direct Debit payment system in Nigeria.
NIBSS secured the consent of the Securities and Exchange Commission (SEC) and other major stakeholders of the Nigerian capital market in 2007 to be the sole processor of shareholders dividends. NIBSS has thus integrated the registrar companies in the capital market to the NIBSS Electronic payment network to facilitate the processing and payment of shareholders dividends and interest on Bonds, Shares and other investment through the Automated Clearing House.
A ACH is an irrevocable fund transfer instruction where a bank simply captures their customer’s funds transfer instructions electronically. However, the bank will first debit the customer’s account to ensure that the funds are set aside after which such a bank customer’s instruction (along with other customers instructions) are sent to NIBSS as an electronic file for onward processing. NIBSS subsequently processes each electronic file from banks containing several ACH instructions to ensure the beneficiaries receive value such that their accounts are credited within a few hours. Bank transfers are more secure for both the customer and the banks.
There are no cheques that may be misplaced, lost or stolen. Furthermore, since the payment goes directly from the customer to the bank, there is no possibility of fraudulent alteration of the payment amount. The sender’s account is debited immediately in case of credit transfers. This makes account reconciliation much simpler for the customer. The customer does not have to worry about un-presented cheques being debited unexpectedly months later, on presentation by the payee. As ACH credit transfers are credited directly, the payment process is much quicker than with cheques, which must first be presented to the paying bank in clearing. This can result in improved cash flow.
Any payment credited to the beneficiary’s account is a cleared item. There is no possibility of the payment being reversed for insufficient funds, drawer’s confirmation, irregular signature or any other reasons associated with cheques.
This is a service where NIBSS upon request of the client or account owner, sweeps funds at agreed intervals from specified accounts domiciled in some commercial banks into some nominated accounts domiciled at some other banks. While the instruction is given once, the sweeping occurs at regular intervals for as long as may be specified by the client. The service leverages on the NEFT and CMMS functionalities of NIBSS.
NIBSS enriches settlement operations, particularly in the banking system with the NIBSS Intra-day Exposure System (NIDES). It enables all Bank Treasurers and Fund Managers to monitor exposures between banks.
Each of the Banks connected to NIDES are enabled to have early online access to their bank’s exposures to other banks for transactions in the inter-bank money market.
With NIDES, banks could make investment decisions based on the information retrieved. Where a bank treasurer foresees a position that requires shoring up the funding of its activities, it can easily use the bank’s exposure position to access credit from other banks.
In a situation of perceived excess funds at close of business, information obtained from NIDES could be used as a guide to exploring investment outlets for excess funds it may end the day with.
This is a value-added service to banks.
Private switching companies and the Central Securities Clearing System Limited (the clearing system of the Nigeria Capital Market) rely on NIBSS for the settlement of their operations. The settlement data of these companies are transmitted electronically to NIBSS daily (over the NIBSS secure payment network). The NIBSS settlement engine processes received data and aggregates such through the RTGS of the CBN.
Appropriate electronic advices are provided to banks and other stakeholders in every processing cycle.